Plese Give Step by Step Answer I give Thumb up Question 19 of 20View Policies-/2E :Current Attempt in ProgressThe top prize for the state lottery is $101,100,000. You have decided it is time for you to take achance and purchase a ticket. Before you purchase the ticket, you must decide whether to choosethe cash option or the annual payment option. If you choose the annual payment option and win,you will receive $101,100,000 in 24 equal payments of $4,212,500-one payment today and onepayment at the end of each of the next 23 years. If you choose the cash payment, you will receivea one-time lump sum payment of $51,696,589.34. You can invest the proceeds and earn 8%. Atwhat interest rate would you be indifferent between the cash and annual payment options?(Round factor values to 8 decimal places, e.g. 1.52137846 and final answer to O decimal places, e.g.15%.)Click here to view the PV Table.Interest rateSave for Laterdi%Attempts: 0 of 1 used= SUPPORT

Step 1: Understand the ProblemThe goal is to determine at what interest rate the present value of…

Answered: Question 19 of 20 View Policies -/2 E :…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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eBook Problem 7-27 A $1,200,000 state lottery prize is spread evenly over twelve years ($100,000 a year) (Alternative 1), or you may take a lump distribution of $881,000 (Alternative 2). If you can earn 7 percent, calculate the present values of both alternatives. Use Appendix D to answer the question. Round your answers to the nearest dollar.PV(Alternative 1): $ PV(Alternative 2): $ Which alternative is better?-Select-Alternative 1Alternative 2
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