Edward Hughes Has Just Won the State Lottery and Has

question 90

Multiple Choice

Edward Hughes has just won the state lottery and has the following three payout options for after-tax prize money: 1.$166,000 per year at the end of each of the next six years
2) $306,000 (lump sum) now
3) $518,000 (lump sum) six years from now
The annual discount rate is 9%.Compute the present value of the second option.(Round to nearest whole dollar.)
Present value of $1:
$$\begin{array} { | c | c | c | c | } \hline & 8 \% & 9 \% & 10 \% \\\hline 1 & 0.926 & 0.917 & 0.909 \\\hline 2 & 0.857 & 0.842 & 0.826 \\\hline 3 & 0.794 & 0.772 & 0.751 \\\hline 4 & 0.735 & 0.708 & 0.683 \\\hline 5 & 0.681 & 0.650 & 0.621 \\\hline 6 & 0.630 & 0.596 & 0.564 \\\hline 7 & 0.583 & 0.547 & 0.513 \\\hline\end{array}$$

• A) $684,000
• B) $103,600
• C) $414,400
• D) $306,000

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Definitions:

Antipsychotic Drugs

Medications used to treat psychiatric conditions by altering brain chemistry, particularly for conditions like schizophrenia and bipolar disorder.

Off Label

The use of pharmaceutical drugs for an unapproved indication or in an unapproved age group, dosage, or route of administration.

Antidepressant Drugs

Medications prescribed to treat depressive disorders, anxiety disorders, and sometimes chronic pain.

Neuroleptics

A class of medication primarily used to manage psychosis, particularly in schizophrenia and bipolar disorder, also known as antipsychotics.