The state lottery claims that its grand prize is 1 million, Ask an Expert

Finance

The state lottery claims that its grand prize is $1 million. The lucky winner will receive $50,000 upon presentation of the winning ticket plus $50,000 at the end of each year for the next 19 years.

a-Why isn't this really a million-dollar prize?

b-What would it actually be worth in dollars to you?

c-What would the twenty yearly payments need to be for the present value of the lottery to be $1 million?

The first step is to determine what type of an annuity the lottery represents.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92831485

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