Joe Brady Just Won a $450,000 Lottery in Pennsylvania

question 104

Multiple Choice

Joe Brady just won a $450,000 lottery in Pennsylvania. Instead of receiving a lump sum, he found that he would receive $22,500 annually (end of year) for 20 years. Joe is 75 years old and wants his money now. He has been offered $140,827 to sell his ticket. What rate of return is the buyer expecting to make if Joe accepts the offer?

• A) less than 1%
• B) 15%
• C) 18%
• D) 12%

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Definitions:

Blurring of Colours

The phenomenon where distinct colors appear to mix or smear together, often as a result of optical issues or specific conditions of light.

Subliminal Perception

The process by which stimuli presented below the threshold of conscious awareness influence thoughts, feelings, or actions.

Signal-detection Theory

A means to quantify the ability to discern between information-bearing patterns and random patterns that distract from the information.

Correct Rejection

In signal detection theory, the accurate identification that a signal is not present.