John Won the Lottery on Monday and Can Take Either

question 133

Essay

John won the lottery on Monday and can take either $50,000 per year for 20 years,or $500,000 today.Bill won the same lottery on Tuesday and has the same options for receiving the cash.A well respected financial advisor is hired by both John and Bill.The advisor recommends that John take the $50,000 per year for 20 years but advises Bill to take the $500,000 up front payment.How is it possible to give different advice to two clients regarding the exact same cash flows?

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Definitions:

Ambiguous Jurisdictions

Situations where the authority or legal power to govern or make decisions is unclear or disputed.

Scarce Resources

Resources that are limited in availability and cannot satisfy all the demands or requirements in a given environment.

Dependence

A situation in which someone relies on something or someone else for support or needs them in order to survive or succeed.

Prime Work Positions

Employment roles considered highly desirable due to factors like salary, status, or the opportunity for professional growth.