The State operates a million dollar lottery that pays its winner 20 equal annual payments. The...
The State operates a million dollar lottery that pays its winner 20 equal annual payments. The Interest rate to finance this lottery has been 4%. How many $1 tickets needs to be sold for the lottery to break even?
Homework Answers
Assuming first payment made when the lottery tickets was purchased ,equal annual installment will amount to 1000000/20=50000
Present value of the winnings at 4% discounting-
50000+50000/1.04+50000/1.04^2+....50000/1.04^19=50000(1-(1/1.04)^20)/(1-(1/1.04))=706697
Hence, Total no of $1 lottery tickets needed to be sold to break even is 706,697/1=706,697
Add Answer to:
The State operates a million dollar lottery that pays its winner
20 equal annual payments. The...
4. The state lottery claims that its grand prize is $1 million. The lucky winner will...
4. The state lottery claims that its grand prize is $1 million. The lucky winner will receive $100,000 upon presentation of the winning ticket plus $100,000 at the end of each year for the next 9 years. Assume a 8% discount rate. a-Why isn't this really a million-dollar prize? b. What would it actually be worth in dollars to you? c. What would the 10 yearly payments need to be for the present value of the lottery to be $1...
4. The state lottery claims that its grand prize is $1 million. The lucky winner will...
4. The state lottery claims that its grand prize is $1 million. The lucky winner will receive $100,000 upon presentation of the winning ticket plus $100,000 at the end of each year for the next 9 years. Assume a 10% discount rate. a-Why isn't this really a million-dollar prize? (5 Points) b-What would it actually be worth in dollars to you? (5 Points) C-What would the 10 yearly payments need to be for the present value of the lottery to...
Question 11 (1 point) The winner of a "Fifty-million dollar" lottery prize is actually entitled to...
Question 11 (1 point) The winner of a "Fifty-million dollar" lottery prize is actually entitled to payments of $500,000 at the end of every six months for 50 years. The winner can select to receive a single lump sum payment equal to the present value of these payments calculated using a rate of 9.8% compounded semi- annually. What would be the amount of the single payment? $5,101,597 $10,118,727 $20,118,147 $39.453 072
Practice: Lottery Winner - Lump Sum or Annual Payments? A 26-year-old hairdresser is celebrating after what she thought...
Practice: Lottery Winner - Lump Sum or Annual Payments? A 26-year-old hairdresser is celebrating after what she thought was a $1,000 winning lottery ticket turned out to be worth a staggering $1.3 million.* lt was only when she traveled to the California Lottery Van Nuys District Office on December 26 that she found out she had actually won $1,000 per week for 25 years - a total of $1.3 million (She)... has reportedly arranged to meet a financial adviser to...
You are the lucky winner of the Megazillions lottery. Your prize is $600 million . The...
You are the lucky winner of the Megazillions lottery. Your prize is $600 million . The Lottery Commission has given you a choice: equal annual payments for the next 30 years, or an immediate check for $250 million. Using a 6.5% discount rate, which is the optimal decision from a financial standpoint? (Please show the correct formula)
q61. You win the lottery, which pays $1 million in 20 annual $50,000 payments. Your friends...
q61. You win the lottery, which pays $1 million in 20 annual $50,000 payments. Your friends ask you how much that would be if you received a single lump-sum payment today. You do not have your calculator but you show them a (correct) equation to help solve it themselves, assuming the interest rate is 10 percent: Which equation did you show them?
#7. The winner of a state lottery is offered a choice of either receiving $7 million...
#7. The winner of a state lottery is offered a choice of either receiving $7 million now as a lump sum or of receiving A dollars a year for the next 5 years as a continuous income stream. If the prevailing annual interest rate is 6% compounded continuously and the two payouts are the same, what is the value of A?
You have just won a $5 million lottery to be received in twenty annual equal payments of $250,000. What will happen...
You have just won a $5 million lottery to be received in twenty annual equal payments of $250,000. What will happen to the present value of your winnings if the interest rate increases during the next 20 years? It will be worth less. It will be worth more. It will not change It will increase during the first ten years.
Question 2 A state lottery makes the following announcement: "Frederick Carbuncle has just won $100 million! We'll pay Frederick $10 million each year for the next 10 years!" a. Has Frede...
Question 2 A state lottery makes the following announcement: "Frederick Carbuncle has just won $100 million! We'll pay Frederick $10 million each year for the next 10 years!" a. Has Frederick really won $100 million? Explain b. Many state lotteries allow winners to choose a single payment instead of a series of annual payments. "We'll offer you the present value of your annual payments, Frederick," the lottery commissioner says. "And because we're feeling generous, we'll use a really high interest...
A lottery winner will receive $1 million at the end of each of the next ten...
A lottery winner will receive $1 million at the end of each of the next ten years. What is the future value of her winnings at the time of her final payment (in millions of dollars), given that the interest rate is 9.5% per year? (Round your answer to three decimal places.) $ million -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Your grandmother has been putting $1,000 into a savings account on every birthday since your first (that is, when you turned one). The account pays...
4. The state lottery claims that its grand prize is $1 million. The lucky winner will receive $100,000 upon presentation of the winning ticket plus $100,000 at the end of each year for the next 9 years. Assume a 10% discount rate. a-Why isn't this really a million-dollar prize? (5 Points) b-What would it actually be worth in dollars to you? (5 Points) C-What would the 10 yearly payments need to be for the present value of the lottery to...
Question 11 (1 point) The winner of a "Fifty-million dollar" lottery prize is actually entitled to payments of $500,000 at the end of every six months for 50 years. The winner can select to receive a single lump sum payment equal to the present value of these payments calculated using a rate of 9.8% compounded semi- annually. What would be the amount of the single payment? $5,101,597 $10,118,727 $20,118,147 $39.453 072
Practice: Lottery Winner - Lump Sum or Annual Payments? A 26-year-old hairdresser is celebrating after what she thought was a $1,000 winning lottery ticket turned out to be worth a staggering $1.3 million.* lt was only when she traveled to the California Lottery Van Nuys District Office on December 26 that she found out she had actually won $1,000 per week for 25 years - a total of $1.3 million (She)... has reportedly arranged to meet a financial adviser to...
#7. The winner of a state lottery is offered a choice of either receiving $7 million now as a lump sum or of receiving A dollars a year for the next 5 years as a continuous income stream. If the prevailing annual interest rate is 6% compounded continuously and the two payouts are the same, what is the value of A?
You have just won a $5 million lottery to be received in twenty annual equal payments of $250,000. What will happen to the present value of your winnings if the interest rate increases during the next 20 years? It will be worth less. It will be worth more. It will not change It will increase during the first ten years.
Question 2 A state lottery makes the following announcement: "Frederick Carbuncle has just won $100 million! We'll pay Frederick $10 million each year for the next 10 years!" a. Has Frederick really won $100 million? Explain b. Many state lotteries allow winners to choose a single payment instead of a series of annual payments. "We'll offer you the present value of your annual payments, Frederick," the lottery commissioner says. "And because we're feeling generous, we'll use a really high interest...
Most questions answered within 3 hours.
-
1a)
. State the difference (IN YOUR OWN
WORDS) between
-absolute advantage and comparative
advantage.
-between...
asked 1 minute from now -
Calculate the mass of 11.3 mL of a liquid with a density of 8
g/mL. INCLUDE...
asked 4 minutes ago -
In the movie "Is America Number One" we see a continued reliance
on a concept that...
asked 3 minutes ago -
In tae-kwon-do, a hand is slammed down onto a target
at a speed of 11 m/s...
asked 3 minutes ago -
consider the following price index in 2017:85; price
index in 2018: 100; price index 2019: 110;...
asked 28 minutes ago -
What is the [CH3COO–]/[CH3COOH]
ratio necessary to make a buffer solution with a pH of 4.34?...
asked 34 minutes ago -
a
physics textbook is thrown straight upward with a velocity of 5.00
m/s from the too...
asked 34 minutes ago -
QUESTION: Provide a real-world example or describe a
hypothetical situation in which a legitimate organization used...
asked 32 minutes ago -
In the United States, laws mandating that companies be
responsible for take back of electronic wastes...
asked 50 minutes ago -
URGENT PLEASE HELP. could you make it easy to understand and in
C++ thanks
1. (30...
asked 58 minutes ago -
Case Study. Multi Projects
Multi Projects, Inc., is a well-established consulting firm
with 400 employees. It...
asked 1 hour ago -
An 8.00 kg point mass and a 15.0 kg point mass are held in place
50.0...
asked 1 hour ago