You Have Just Received Notification That You Have Won the $1.25

question 29

Multiple Choice

You have just received notification that you have won the $1.25 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100ᵗʰ birthday, 79 years from now. The appropriate discount rate is 6.4 percent. What is the present value of your winnings?

• A) $11,288.16
• B) $9,300.82
• C) $10,309.91
• D) $8,333.33
• E) $10,500.00

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Definitions:

Massachusetts Bay Colony

A 17th-century British settlement in New England established by Puritan settlers seeking religious freedom.

John Winthrop

A leading figure in the founding of the Massachusetts Bay Colony, a prominent Puritan colonial governor, and known for his vision of the colony as a "city upon a hill."

African Slave Trade

The historic practice of forcibly transporting African people to the Americas to be sold as slaves, spanning from the 16th to the 19th century.