A Lottery Winner Can Take $6 Million Now or Be

question 7

Multiple Choice

A lottery winner can take $6 million now or be paid $600,000 at the end of each of the next 16 years. The winner calculates the internal rate of return (IRR) of taking the money at the end of each year and, estimating that the discount rate across this period will be 4%, decides to take the money at the end of each year. Was her decision correct?

• A) Yes, because it agrees with the Net Present Value rule.
• B) Yes, because it agrees with the payback rule.
• C) Yes, because it agrees with both the Net Present Value rule and the payback rule.
• D) Yes, because it disagrees with the Net Present Value rule.

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Definitions:

Social Theories

Encompasses conceptual frameworks and perspectives for understanding social phenomena, relationships, and structures.

Sociological Theories

Collective ideas that provide explanations about society, its structure, and the dynamics of social interactions within it.

Jacques Derrida

A French philosopher best known for developing deconstruction, a critical approach that emphasizes the inherent differences and contradictions in texts.

Deconstructed

A rephrased definition: An analysis technique used to critically dissect complex ideas or texts to uncover hidden meanings and assumptions.