Congratulations! You Are the Proud Winner of the Multi-State Sour

question 101

Multiple Choice

Congratulations! You are the proud winner of the multi-state Sour Ball Lottery.You are to receive $2,000,000 at the end of each year for the next 20 years.While the Lottery Commission refers to this as a $40,000,000 jackpot,if you choose the "cash option" they will give you much less than that; you can receive a lump sum payment today equal to the present value of the ordinary annuity instead of the 20 annual payments.If the discount rate that the Lottery Commission uses to determine the lump sum payoff is 7%,what is your payoff if you select the cash option?

• A) $26,945,332
• B) $39,707,503
• C) $42,977,401
• D) $21,188,028

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Definitions:

Success Indicator

A measurable value or metric that demonstrates the effectiveness, achievement, or progress toward a specific goal or objective.

Quantity Of Production

Refers to the total amount of goods or services produced by a company or industry within a specific period.

Soviet Union

A former federal socialist state in Eurasia that existed from 1922 to 1991, composed of multiple Soviet republics, and known for its role in global politics, particularly during the Cold War.

Creative Destruction

is an economic concept that describes the process by which newer innovations replace outdated industries or products, driving economic growth.