You Just Won the Lottery,and You Have a Choice Between

question 84

Multiple Choice

You just won the lottery,and you have a choice between receiving $3,500,000 today or a 10-year annuity of $500,000,with the first payment coming 1 year from today.What rate of return is built into the annuity?

• A)6.72%
• B)7.07%
• C)7.43%
• D)7.80%

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Definitions:

Fixed Price

A fixed price refers to a pricing strategy where a specific cost is set for a product or service, not subject to change based on fluctuations in market demand or supply.

Provincial Jurisdiction

The legal authority granted to provincial governments to legislate and govern in certain areas that are not within federal jurisdiction.

Discretionary Income

The amount of an individual's income that is left for spending, investing, or saving after taxes and personal necessities have been paid.

Family Life Cycle

The distinct phases that a family progresses through from formation to retirement, each phase bringing with it identifiable purchasing behaviors.