Felice Lucas Has Just Won the State Lottery and Has

question 81

Multiple Choice

Felice Lucas has just won the state lottery and has the following three payout options for after-tax prize money: 1.$170,000 per year at the end of each of the next six years
2) $312,000 (lump sum) now
3) $508,000 (lump sum) six years from now
The annual discount rate is 9%.Compute the present value of the first option.(Round your answer to the nearest whole dollar.)
Present value of an ordinary annuity of $1:
$$\begin{array} { | r | r | r | r | } \hline & 8 \% & 9 \% & 10 \% \\\hline 1 & 0.926 & 0.917 & 0.909 \\\hline 2 & 1.783 & 1.759 & 1.736 \\\hline 3 & 2.577 & 2.531 & 2.487 \\\hline 4 & 3.312 & 3.240 & 3.170 \\\hline 5 & 3.993 & 3.890 & 3.791 \\\hline 6 & 4.623 & 4.486 & 4.355 \\\hline 7 & 5.206 & 5.033 & 4.868 \\\hline\end{array}$$ Present value of $1:
$$\begin{array} { | l | r | r | r | } \hline & 8 \% & 9 \% & 10 \% \\\hline 1 & 0.926 & 0.917 & 0.909 \\\hline 2 & 0.857 & 0.842 & 0.826 \\\hline 3 & 0.794 & 0.772 & 0.751 \\\hline 4 & 0.735 & 0.708 & 0.683 \\\hline 5 & 0.681 & 0.650 & 0.621 \\\hline 6 & 0.630 & 0.596 & 0.564 \\\hline 7 & 0.583 & 0.547 & 0.513 \\\hline\end{array}$$

• A) $850,000
• B) $762,620
• C) $482,000
• D) $457,251

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Definitions:

Frequencies

The count of how often different values or categories occur in a dataset.

Variables

Elements, characteristics, or factors that can change or vary in a research study, influencing the outcome or results.

Qualitative Data

Qualitative data consist of non-numerical information that describes characteristics, qualities, or categories of objects or subjects.

Bar Chart

A graphical representation of data using bars of varying heights to depict the values of different categories.