Suppose You Have a Winning Lottery Ticket and You Have

question 266

Multiple Choice

Suppose you have a winning lottery ticket and you have the option of accepting $3,000,000 three years from now or taking the present value of the $3,000,000 now. The sponsor of the prize uses a 6% discount rate. If you elect to receive the present value of the prize now, the amount you will receive is

• A) $2,518,858.
• B) $2,591,520.
• C) $2,670,000.
• D) $3,000,000.

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Definitions:

Equilibrium Price

The price at which the quantity of a good supplied equals the quantity demanded, achieving market balance.

Buyers

Individuals or entities that purchase goods or services for consumption or investment.

Sellers

Individuals or entities that offer goods or services for sale to potential buyers in a marketplace.

Input Price

The cost associated with purchasing the raw materials, labor, and other resources required to produce goods and services.