# Finance

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A state's lottery winner is promised \$200,000 a year for 3 years(starting at the end of the first year). Interes rate is annually 7 percent on its fund.
How much is the present value of this lottery?

• Finance -

Year 1 = 200,000 plus .07% = 14,000

Year 2 = 400,000 plus .07% = 28,000

Year 3 = 600,000 plus .07% = 42,000

When you say "the present value of this lottery" do you mean at the end of the 3rd year? If you mean NOW and he hasn't collected any money = 0!

Sra

• Finance -

What is the expected return on a portfolio consisting of an equal amount invested in each stock?
Stock Expected return
A 15%
B 10
C 22
D 14

b. What is the expected return on the portfolio if 50 percent of the funds are invested in stock C, 30 percent in stock A, and 20 percent in stock D?

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