A lottery prize is advertised as being $4,000,000 ($4 million). The winner receives $1 million immediately and then $500,000 (half a million dollars) at the beginning of each year for the next 6 years. Or the winner can elect to receive a single payment of $3,000,000 immediately. If the appropriate rate of interest for the winner is 10%, should she choose the single payment or the series of payments over 6 years? Ignore taxes, and assume the decision is made strictly on financial grounds. The present value of the series of payments over 6 years is $ rounded to two decimal places.) (Enter your response

A lottery prize is advertised as being $4,000,000 ($4 million). The winner receives $1 million immediately and then $500,000 (half a million dollars) at the beginning of each year for the next 6 years. Or the winner can elect to receive a single payment of $3,000,000 immediately. If the appropriate rate of interest for the winner is 10%, should she choose the single payment or the series of payments over 6 years? Ignore taxes, and assume the decision is made strictly on financial grounds. The present value of the series of payments over 6 years is $ rounded to two decimal places.) (Enter your response

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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