CONGRATULATIONS! You will receive a big winning from a lottery. However you are given three options:...
CONGRATULATIONS! You will receive a big winning from a lottery. However you are given three options: 1) Take the whole winning amount at end of year 1. 2) Take the whole same winning amount at end of year two. 3) You would prefer to get same amount, in few instalments. You should choose option one or two? Explain your decision with the help of Financial concepts learnt.
Homework Answers
Option1 should be chosen
Take the whole winning amount at end of year 1
Because if one chooses Option 2 then present value of amount decreases due to discounting for 2 years, here in Option 1 amount is being discounted only for 1 year.
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CONGRATULATIONS! You will receive a big winning from a lottery.
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Winning one of the big national lotteries provides a choice of how to receive the money....
Winning one of the big national lotteries provides a choice of how to receive the money. You can receive a much-reduced lump sum (like half or so) today, or the full amount in twenty annual payments starting today. Discuss how you can determine which financial deal is better. Also, what are the non-financial aspects to winning the lottery and how do they influence which option to take?
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Congratulations! You have won a state lottery. The state lottery offers you the following (after-tax) payout options: BE: (Click the icon to view the payout options.) (Click the icon to view Present Value of $1 table.) (Click the icon to view Future Value of $1 table. (Click the icon to view Present Value of Ordinary Annuity of $1 table.) (Click the icon to view Future Value of Ordinary Annuity...
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help with explanations please 6. Suppose that you have a winning lottery ticket for $100,000. The...
help
with explanations please
6. Suppose that you have a winning lottery ticket for $100,000. The State of California doesn't pay this amount up front this is the amount you will receive over time. The State offers you two options. The first pays you $80,000 up front and that will be the entire amount. The second pays you winnings over a three year period. The last option pays you a large payment today with small payments in the future. The...
Congratulations! You've won a state lotto! The state lottery offers you the following (after-tax) payout options: (Click the icon to view the payout options.) (Click the icon to view the present value factor table.) (Click the icon to view the present value annuity factor table.) (Click the icon to view the future value factor table.) 5 (Click the icon to view the future value annuity factor table.) Requirement Assuming that you can earn 8% on your funds, which option would...
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Congratulations! You have won a state lottery. The state lottery offers you the following (after-tax) payout options: BE: (Click the icon to view the payout options.) (Click the icon to view Present Value of $1 table.) (Click the icon to view Future Value of $1 table. (Click the icon to view Present Value of Ordinary Annuity of $1 table.) (Click the icon to view Future Value of Ordinary Annuity...
help
with explanations please
6. Suppose that you have a winning lottery ticket for $100,000. The State of California doesn't pay this amount up front this is the amount you will receive over time. The State offers you two options. The first pays you $80,000 up front and that will be the entire amount. The second pays you winnings over a three year period. The last option pays you a large payment today with small payments in the future. The...
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