John Wins the Lottery and Has the Following Three Payout

question 95

Multiple Choice

John wins the lottery and has the following three payout options for after-tax prize money: 1. $150,000 per year at the end of each of the next six years
2. $300,000 (lump sum) now
3. $500,000 (lump sum) six years from now
The required rate of return is 9%. What is the present value if he selects the first option? Round to nearest whole dollar.
Present value of annuity of $1: Present value of $1:

• A)$750,000
• B)$672,900
• C)$450,000
• D)$450,050

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Definitions:

Exploitive Nature

Refers to actions or systems that take unfair advantage of people or resources for personal or organizational gain.

Economic System

The structure and methods by which a society or country organizes and allocates its resources, goods, and services.

Domestication

The process of adapting wild plants or animals for human use, or the adaptation of technology within societal and cultural contexts.