You Win the Lottery and Are Given the Option of Receiving

question 412

Multiple Choice

You win the lottery and are given the option of receiving $250,000 now or an annuity of $25,000 at the end of each year for 30 years. Which of the following is correct? (Ignore taxes.)

• A) You cannot choose between the two without first calculating future values.
• B) You will always choose the lump regardless of interest rates.
• C) You will choose the annuity payment if the interest rate is 7%.
• D) You will always choose the annuity.
• E) Comparing the future value of the two alternatives will lead to a different decision than you will reach from a comparison of the present values.

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Definitions:

Primary Material

The original or main materials used in studies, research, or art, often providing direct evidence or firsthand accounts.

Maya Lin

An American architect and artist known for her minimalist works and environmental art, including the Vietnam Veterans Memorial.

Minimalist Sculpture

An art movement that emerged in the 1960s, characterized by simple, geometric forms and a lack of personal expression to focus on the artwork itself.

Site-Specific Installation

Artwork created to exist in a certain place, often designed to transform the perception of the space.