Congratulations! You Have Just Won the Lottery! However, the Lottery

question 153

Essay

Congratulations! You have just won the lottery! However, the lottery bureau has just informed you that you can take your winnings in one of two ways. Choice X pays $1,000,000. Choice Y pays $1,750,000 at the end of five years from now. Using a discount rate of 5 percent, based on present values, which would you choose? Using the same discount rate of 5 percent, based on future values, which would you choose? What do your results suggest as a general rule for approaching such problems? (Make your choices based purely on the time value of money.)

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Definitions:

Cloud Storage

Storage of data on a server that is located somewhere other than the home or company, usually a data center or cloud storage service provider.

Administrative Share

A share created by Microsoft for drive volumes and the folder that contains the majority of Windows files. An administrative share has a dollar sign at the end of its name.

Microsoft

A multinational technology company known for its software, services, devices, and solutions like Windows, Office, and Azure.

Drive Volumes

Logical divisions of storage on a physical disk drive, allowing for management and organization of data separately within the same physical device.