John Wins the Lottery and Has the Following Three Payout

question 41

Multiple Choice

John wins the lottery and has the following three payout options for after-tax prize money: 1. $50,000 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 third option? Round to nearest whole dollar.
Present value of $1:

• A)$250,000
• B)$230,000
• C)$238,400
• D)$298,000

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Definitions:

Abnormal Blood Flow

A condition where the circulation of blood through the body's vessels occurs at an irregular rate or volume, potentially leading to health issues.

Synesthesia

A neurological condition where stimulation of one sensory or cognitive pathway leads to involuntary experiences in a second sensory or cognitive pathway.

Barbiturates

A class of drugs acting as central nervous system depressants, traditionally used for anesthesia, sedation, and as anticonvulsants.

THC

Tetrahydrocannabinol, the psychoactive compound found in cannabis that is responsible for its intoxicating effects.