Prizes Are Often Not "Worth" as Much as Claimed

question 30

Multiple Choice

Prizes are often not "worth" as much as claimed. Place a value on a prize of $5,000,000 that is to be received in equal payments over 20 years, with the first payment beginning today. Assume an interest rate of 7%.

• A) $2,833,898.81
• B) $2,911,015.68
• C) $2,609,144.14
• D)$2,738,304.13

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Definitions:

Rental Units

Housing units, such as apartments or houses, that are available for rent to tenants.

Surplus

A situation where the quantity supplied of a good exceeds the quantity demanded at a given price.

Price Ceiling

A legal maximum price that can be charged for a good or service, typically set by government regulation.

Shortage

A situation where the demand for a good or service exceeds the supply available at a specific price.