Suppose, you have won a lottery prize You have two payment options: A: Receive $20,000 now B: Receive $5,800 a year paid for four years and interest rate is 8%. Which option would you choose and why? For choice B please make calculations

Suppose, you have won a lottery prize You have two payment options: A: Receive $20,000 now B: Receive $5,800 a year paid for four years and interest rate is 8%. Which option would you choose and why? For choice B please make calculations

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter6: Saving And Investing

Section6.1: Why Save?

Problem 6R

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Question

Suppose, you have won a lottery prize You have two payment options:

A: Receive $20,000 now

B: Receive $5,800 a year paid for four years and interest rate is 8%.

Which option would you choose and why?

For choice B please make calculations

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