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You win a $10,000,000 lottery. The lottery will pay you 20 annual payments of $500,000 with the first payment received immediately and the last payment 19 years from today. The constant risk free interest rate is 7%

1. What is the present value of the lottery payments?

2. Would you prefer to receive 21 annual payments of $480,000 starting today? What is the present value of those payments?

Business Management, Management Studies

  • Category:- Business Management
  • Reference No.:- M91260375

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