You Have Won $4,400,000 in a Lottery

question 20

Multiple Choice

You have won $4,400,000 in a lottery.Your winnings will be paid to you in equal annual year-end installments of $440,000 over 10 years.You estimate that you can earn 6% on your investments.The present value of $1 for 10 periods at 6% is 0.558.The present value of an ordinary annuity of $1 for 10 periods at 6% is 7.36.The present value of your $4,400,000 winnings would be closest to:

• A)$4,400,000.
• B)$3,238,400.
• C)$2,978,800.
• D)$3,850,000.

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Definitions:

Multiple Accounting

A method or system for keeping financial records that may involve tracking various financial transactions or accounts to ensure accuracy and completeness.

GDP Deflator

An economic metric that converts output measured at current prices into constant-dollar GDP, stripping out the effects of inflation to reflect the real volume of goods and services produced.

National Income

The total amount of money earned within a country from the production of goods and services over a specific period.

Profits

The financial gain that is achieved when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.