Suppose You Just Won the State Lottery, and You Have

question 23

Multiple Choice

Suppose you just won the state lottery, and you have a choice between receiving $2,550,000 today or a 20-year annuity of $250,000, with the first payment coming one year from today.What rate of return is built into the annuity? Disregard taxes.

• A) 7.12%
• B) 7.49%
• C) 7.87%
• D) 8.26%
• E) 8.67%

---

Definitions:

Contractual Purposes

The intended aims or goals that parties seek to achieve through entering into a contract.

Covenant Not to Compete

A legal agreement in which one party agrees not to enter into or start a similar profession or trade in competition against another party.

Unreasonable

Actions or decisions that lack rational basis, often seen as unfair or unjustified under the given circumstances.

Essential Terms

The critical and necessary conditions or clauses in a contract that define the parties' key obligations and rights.