If Lucky Louie Won a Lottery and Chose to Take

question 48

Multiple Choice

If Lucky Louie won a lottery and chose to take $10,000,000 ten years from now (disregarding taxes) , what would be the equivalent amount today, at 6% per annum?

• A) $5,743,491
• B) $5,583,948
• C) $6,050,972
• D) Not enough information is provided to solve the problem.

Understand and apply the profitability index (PI) in investment evaluation.

Comprehend the internal rate of return (IRR) and its implications for investment decisions.

Recognize the limitations and potential pitfalls of using the IRR and PI for mutually exclusive investments.

Understand the concept of the crossover rate and its relevance in comparing mutually exclusive projects.

---

Definitions:

Ossicles

The three small bones in the middle ear called the malleus, incus, and stapes, which are essential for the transmission of sound.

Eardrum

A slim barrier dividing the external ear from the middle ear, which oscillates upon receiving sound vibrations.

Pharynx

A muscular tube that connects the mouth and nasal passages to the esophagus and larynx, facilitating breathing and swallowing.

Endolymph

A fluid located within the membranous labyrinth of the inner ear, playing a key role in hearing and balance.