Suppose You Have a Winning Lottery Ticket and You Are

question 43

Multiple Choice

Suppose you have a winning lottery ticket and you are given the option of accepting $3,000,000 three years from now or taking the present value of the $3,000,000 now.The sponsor of the prize uses a 6% discount rate.If you elect to receive the present value of the prize now, the amount you will receive is

• A)$2,518,860.
• B)$2,591,520.
• C)$2,670,000.
• D)$3,000,000.

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Definitions:

Promissory Estoppel

A legal principle that prevents a party from withdrawing a promise made to another when the latter has relied on that promise to their detriment.

Detrimental Reliance

A legal principle where a party suffers a loss due to their reliance on a promise or agreement that is not fulfilled by the other party.

Unenforceable Contract

A contract that is not legally binding and cannot be enforced by law due to certain deficiencies or lack of key requirements.

Adequacy of Consideration

A legal principle that examines whether the value exchanged in a contract is fair and reasonable to all parties involved.