John Won a Lottery That Will Pay Him $250,000 at the End

question 148

Multiple Choice

John won a lottery that will pay him $250,000 at the end of each of the next twenty years. Assuming an appropriate interest rate is 8% compounded annually, what is the present value of this amount?

• A) $2,650,900.
• B) $53,638.
• C) $2,454,538.
• D) $11,440,490.

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Definitions:

Edmonton

The capital city of Alberta, Canada, known for its vibrant culture and as the gateway to the North.

Holding Cost

The expenses associated with storing unsold goods or materials, including warehousing, insurance, spoilage, and opportunity costs.

Per Month

A time frame or period used to measure or track events on a monthly basis.

Holding Cost Rate

The expense associated with storing unsold goods or materials over a period.