Mary Alice Just Won the Lottery and Is Trying to Decide

question 33

Multiple Choice

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?

• A)$6,250,000.
• B)$3,195,840.
• C)$3,637,590.
• D)$3,387,590.

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Definitions:

Summary Jury Trial

A shortened version of a trial conducted in less than a day before a jury. The jury’s verdict is advisory only.

Time Limit

A set duration or deadline by which a certain action must be completed or a decision must be made.

Arguments

Reasons or statements put forward to support or oppose a claim, idea, or proposal, especially in a legal, academic, or policy context.

Arbitration Hearing

A dispute resolution process where an arbitrator makes a decision to resolve a dispute outside of court.