Suppose that you win the state lottery you have two options, Ask an Expert

Economics

Suppose that you win the state lottery. You have two options to receive your winnings. Plan 1 pays you a lump-sum amount of $300,000. Plan 2 pays you $20,000 today, $100,000 after one year, and $200,000 after two years. Assume that the current interest rate is 6%.

1) Using the Excel spreadsheet, calculate the present value of Plan 2. To do this, calculate the present value of each payment. Then sum these three present values in the cell marked "Total." Please enter a whole number, with no decimal point.

2) True or false: You choose Plan 1 because it gives a higher present value.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91709976

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