The Winner of the Mega Millions Lottery Game Can Choose

question 67

Multiple Choice

The winner of the Mega Millions lottery game can choose to accept a one-time payout of $163.68 million or receive $11 million per year for 20 years. Using the tables shown and assuming the interest rate is 3 percent, the state: $\begin{array}{|r|l|}\hline\begin{array}{c} \text { Annuity Table } \\ \text { (value now of \$1 Per year To be } \\ \text { received for x-years) } \\\begin{array}{c|c|c|c}\hline {\text { Year }} & \mathbf{3 \%} & \mathbf{4 \%} & \mathbf{6 \%} \\\hline 10 & 8.53 & 8.11 & 7.36 \\\hline 15 & 11.94 & 11.12 & 9.71 \\\hline 20 & 14.88 & 13.59 & 11.47 \\\hline 30 & 19.60 & 17.29 & 13.76 \\\hline\end{array}\end{array}& \begin{array}{c} \text { Present Value Table } \\ \text { (Value now to \$ 1 to be received} \\ \text { x-years un the future) } \\\begin{array}{c|c|c|c}\hline \text { Year } & \mathbf{3} \% & \mathbf{4 \%} & \mathbf{6 \%} \\\hline 10 & 0.74 & 0.68 & 0.53 \\\hline 15 & 0.64 & 0.56 & 0.42 \\\hline 20 & 0.55 & 0.46 & 0.31 \\\hline 30 & 0.41 & 0.31 & 0.17 \\\hline\end{array}\end{array}\\\hline\end{array}$

• A)prefers to pay the lump sum because it saves about $100 million.
• B)probably does not care-it has set the lump sum equal to the present value of the payments over time.
• C)prefers to pay over time because it will save money.
• D)probably does not know which is better because the two cannot be compared.

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Definitions:

Target Markets

Target markets are specific groups of potential customers that a business aims to attract and serve with its products or services.

Output-Related

Pertaining to the results or outputs generated by a process, system, or organization.

Units Sold

Refers to the total quantity of products that have been sold within a specific time period.

Sales Objective

A goal or target set by a business or sales team to achieve within a specific period, often quantified by sales volume or revenue.