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Levels Tought:
Elementary,Middle School,High School,College,University,PHD
| Teaching Since: | May 2017 |
| Last Sign in: | 402 Weeks Ago, 3 Days Ago |
| Questions Answered: | 66690 |
| Tutorials Posted: | 66688 |
MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
5-21Â Â Â Â Â Â EVALUATING LUMP SUMS AND ANNUITIESÂ Crissie just won the lottery, and she must choose between three award options. She can elect to receive a lump sum today of $61 million, to receive 10 end-of-year payments of $9.5 million, or to receive 30 end-of-year payments of $5.5 million.
a.       If she thinks she can earn 7% annually, which should she choose?
b.      If she expects to earn 8% annually, which is the best choice?
c.       If she expects to earn 9% annually, which option would you recommend?
d.      Explain how interest rates influence the optimal choice.
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