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To Determine Whether a Lottery Winner Would Prefer to Receive

question 146

Multiple Choice

To determine whether a lottery winner would prefer to receive the money in a single lump sum immediately or receive an equal amount over a period of years, you would use which type of time value of money calculation?


Definitions:

Production

The process of combining various material inputs and immaterial inputs (plans, know-how) in order to make something for consumption (output).

Opportunity Cost

The detriment of neglecting the next optimal alternative during the process of making a decision.

Opportunity Cost

The benefit that is missed or given up when choosing one alternative over another.

Hour

A unit of time equal to 60 minutes.

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