O'Reilly Is a Masterful Lottery Player

question 108

Essay

O'Reilly is a masterful lottery player. The megamillion jackpot is now up to $200 million. If O'Reilly wins the jackpot, he has a choice of receiving $200 million in 5 years or a smaller lump sum currently. Advise O'Reilly on his choice under the following scenarios. Which option should he take and why?
Use Exhibit 3.1.
a. O'Reilly's after-tax return is 10%. If he chooses the current lump sum option, the lottery will pay him $130 million.
b. O'Reilly's after-tax return is 10%. His current tax rate will be 35% if he receives the lottery payment now. His expected tax rate in five years will be 40%. If he chooses the current lump sum option, the lottery will pay him $100 million.

Identify psychological reactions like cognitive dissonance and how they affect individuals.

Recognize the role of personality traits like external and internal locus of control in behavior.

Understand how personality assessments can be used to predict behaviors in organizational settings.

Describe the significance of problem-solving style and decision-making in personality.

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Definitions:

Gold Standard

A monetary system in which a country's currency or paper money has a value directly linked to gold, allowing for the conversion of currency into a fixed amount of gold.

Tennessee Valley Authority

A federally owned corporation in the United States created in 1933 to provide navigation, flood control, electricity generation, and economic development in the Tennessee Valley.

Regional Planning

Regional planning involves creating and implementing strategies to address the growth, development, and sustainability of specific geographical areas.

New Deal

A series of programs, public work projects, financial reforms, and regulations enacted by President Franklin D. Roosevelt in the 1930s to counter the Great Depression.