Post a New Question

math

posted by .

6. A lottery offers two options for the prize.

Option A: $1000 a week for life
Option B: $ 600 000 in one lump sum.

The current expected rate of return for large investment is 7%/a, compounded weekly.

a. Which option would the winner choose if s/he expects to live for another 25 years?

  • math -

    so you need to find the Present Value of $1000 per week for 25 years.

    i = .07/52 = .001346153
    n = 25(52) = 1300

    evaluate
    1000( 1 - 1.001346153^-1300)/.001346153

    and compare to $600 000

Answer This Question

First Name:
School Subject:
Answer:

Related Questions

More Related Questions

Post a New Question