The Winner of the Mega Millions Lottery Game Can Choose

question 37

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:

• 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:

Economic Relationships

Describes the connections between individuals or entities based on the production, distribution, and consumption of goods and services.

Karl Marx

A 19th-century philosopher, economist, and political theorist best known for his theories about capitalism and communism.

Socioeconomic Status

A measure of an individual's or family's economic and social position in relation to others, based on income, education, and occupation.

Speech

The expression of thoughts and feelings through spoken language.