Winners of State Lotteries Are Often Given the Choice of Receiving

question 21

Essay

Winners of state lotteries are often given the choice of receiving their winnings either as one lump sum or as annual payments spread out over a period of twenty or more years. For example, a state lottery winner may be given the choice of receiving $1.2 million at once, or $125,000 per year for twenty years. In states where it is allowed, investors will sometimes approach lottery winners and offer to pay them a lump sum greater than the state is offering them (in this case, say, $1.4 million) in exchange for the lottery winner signing over to the investor the right to receive the annual payments. Under what circumstances might this be a good deal for both the lottery winner and the investor?

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Definitions:

Inner Cell Mass

The mass of cells inside the embryonic blastocyst, from which the embryo and eventually the fetus develop.

Endoderm

Cells of the inner cell mass of the embryo that develop into the digestive system and the lungs.

Ectoderm

Cells of the inner cell mass of the embryo that develop into the outer surface of the skin, the nails, part of the teeth, the lens of the eye, the inner ear, and the central nervous system.

Embryonic Period

The period that extends from the time the organism becomes attached to the uterus until the end of the 8th week of pregnancy, when all the major organs have taken primitive shape.