Posted by stephy on .
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 
Reiny,
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