Suppose That Clint Wins a Lottery Jackpot of $300 Million

question 204

Multiple Choice

Suppose that Clint wins a lottery jackpot of $300 million. He can receive it over the next 30 years in annual payments of $10 million, or he can receive a lump sum of $100 million immediately.
Assuming that taxes are not a consideration, should Clint take his winnings as a lump sum?

• A) Yes, but only if rapid inflation is expected over the next 30 years.
• B) Yes, but only if deflation is expected over the next 30 years.
• C) No, the rate of return will always be higher with the 30 annual payments.
• D) Yes, if he can invest in financial assets that will yield greater returns than the interest rate implicit in the annual payments.

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Definitions:

Compatibility

The ability of two or more systems, devices, or components to work together without conflict, enhancing functionality or convenience.

Complexity

The state or quality of being intricate or complicated, often referring to systems or problems that have multiple interconnected parts.

Modernity

A term referring to the cultural, social, and economic characteristics and practices typical of contemporary society, especially in contrast to earlier periods.

Subculture

A segment of a larger culture whose members share distinguishing values and patterns of behavior.