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Mary Alice Just Won the Lottery and Is Trying to Decide

question 33

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Mary Alice just won the lottery and is trying to decide between the annual cash flow payment option of $250,000 per year for 25 years beginning today and the lump-sum option.Mary Alice can earn 6% investing this money.At what lump-sum payment amount would she be indifferent between the two alternatives?


Definitions:

Check Register

A record of all checks written, deposits made, and balances for an individual’s or organization’s checking account.

Bank Statement

An official summary issued by a bank detailing a customer's transactions and balance over a specified period.

Outstanding Deposit

Any sum of money that has been transferred or sent for deposit into a bank account but has not yet been credited to the account.

Adjusted Cash Balance

The cash balance on financial statements after adjustments for checks in transit, deposits in transit, and other discrepancies.

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