Multiple Choice
A lottery offers the winner a choice between a 20 year annuity of $50,000 starting a year from now and a lump sum of half a million dollars payable today. If the current interest rate is 10%, the winner is better off to take:
A) the annuity, because it has a larger future value.
B) the annuity, because it has a larger present value.
C) the lump sum, because it has a larger future value.
D) the lump sum, because it has a larger present value.
Correct Answer:
Verified
Correct Answer:
Verified
Q74: Doug's present and future consumption are perfect
Q75: Discuss a few limitations of the discounted
Q76: From an individual consumer's point of view,
Q77: The local bus company considers purchasing ten
Q78: Assets that generate no utility directly:<br>A)can be
Q80: In the life cycle model, total amount
Q81: In the movie Wall Street, starring Michael
Q82: You own two stocks, one whose value
Q83: A person who borrows money is concerned
Q84: An individual's nearsightedness undermines the validity