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

Respond to this Question

First Name
School Subject
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

    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 at the end of each month for 10 years. Alternatively, under …
  3. 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 …
  4. 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 …
  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. 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 …
  7. 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 …
  8. Foundations Math 12

    Jie is investing $15000 and is choosing between two options. With Option A, the investment is compounded semi-annually and will grow to $20000 in 5 years. With Option B, the investment is compounded monthly for 5 years. The annual …
  9. 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 …
  10. 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 …

More Similar Questions