You Have Just Won a $5 Million Lottery to Be

question 55

Multiple Choice

You have just won a $5 million lottery to be received in twenty annual equal payments of $250,000.What will happen to the present value of your winnings if the interest rate increases during the next 20 years?

• A)it will be worth less
• B)it will be worth more
• C)it will not change
• D)it will increase during the first ten years

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Definitions:

Total Revenue

The total amount of money generated by a business from its sales of goods or services before any expenses are subtracted.

Total Cost

The complete amount of money spent on the production of goods or services, including all variable and fixed costs.

Break-even Point

The point at which total costs equal total revenue, with no profit or loss, indicating the minimum sales volume needed to cover all expenses.

Fixed Costs

Expenses that do not change with the level of production or business activity, such as rent, salaries, and insurance.