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You just won a special lottery, it pays you an annual amount forever. That amount is $1,000 every year (at the end of the year) forever with the first payment starting two years from now (nothing in the first year). You would like to cash in today and wants to sell your lottery rights. How much should you ask to receive today in a lump sum instead of the perpetual cash flows from the lottery. The discount rate of 8%.

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Financial Management, Finance

Category:- Financial Management
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