math

posted by Chelsea

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?

b. At what point in time is Option A better than Option B?

Respond to this Question

First Name

Your Answer

Similar Questions

  1. Mathematics

    Suppose an employee of a company is retiring and has the choice of two benefit options under the company pension plan. Option A consists of a guaranteed payment of $1,575,000 at the end of each month for 10 years. Altematively, under …
  2. math

    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 …
  3. math/ compounded

    Scenario: A client comes to you for investment advice on his $500,000 winnings from the lottery. He has been offered the following options by three different financial institutions and requests assistance to help understand which option …
  4. math

    A client comes to you for investment advice on his $500,000 winnings from the lottery. He has been offered the following options by three different financial institutions and requests assistance to help understand which option would …
  5. math

    A client comes to you for investment advice on his $500,000 winnings from the lottery. He has been offered the following options by three different financial institutions and requests assistance to help understand which option would …
  6. Investment interest

    Scenario: A client comes to you for investment advice on his $500,000 winnings from the lottery. He has been offered the following options by three different financial institutions and requests assistance to help understand which option …
  7. Math

    The Problem: You win the grand prize on a game show. You have the following choices: Option 1: $1-million dollars paid as a $25 000 annuity every year over 40 years. Option 2: The present value of option 1 if the current interest …
  8. math

    A lottery offers two options for the prize. (7) Option A: $1000 a week for life. Option B: $600 000 in one lump sum. If you choose Option B, you have the opportunity to place the winnings into an investment that also makes regular …
  9. math ( Discrete Functions)

    lottery offers two options for the prize. (7) Option A: $1000 a week for life. Option B: $600 000 in one lump sum. If you choose Option B, you have the opportunity to place the winnings into an investment that also makes regular payments, …
  10. math

    The state lottery (which has a 6% lottery tax) offers to pay winnings in 25 annual payments or one lump sum, sometimes called a cash-out option. This week’s lottery has a jackpot of $30 million and a cash-out value of $18.2 million. …

More Similar Questions