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O'Reilly is a masterful lottery player. The megamillion jackpot is now up to $200 million. If O'Reilly wins the jackpot, he has a choice of receiving $200 million in five years or a smaller lump sum now. Advise O'Reilly on his choice under the following scenarios. Which option should he take and why? Use Exhibit 3.1. a. O'Reilly's after-tax return is 10 percent. If he chooses the current lump-sum option, the lottery will pay him $130 million. b. O'Reilly's after-tax return is 10 percent. His current tax rate will be 35 percent if he receives the lottery payment now. His expected tax rate in five years will be 40 percent. If he chooses the current lump-sum option, the lottery will pay him $100 million.
Normal Fault
A type of fault where the hanging wall moves downward relative to the footwall due to tensional forces.
Reverse Fault
A type of fault where the hanging wall moves up relative to the footwall due to compressional forces.
Strike-Slip Fault
A type of fault where two blocks of earth slide past each other horizontally.
Lateral Fault
A type of geological fault where the motion is primarily horizontal.
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