Present Value of an Annuity: Lorraine Jackson Won a Lottery

question 12

Multiple Choice

Present value of an annuity: Lorraine Jackson won a lottery. She will have a choice of receiving $25,000 at the end of each year for the next 30 years, or a lump sum today. If she can earn a return of 10 per cent on any investment she makes, what is the minimum amount she should be willing to accept today as a lump-sum payment? (Round to the nearest hundred dollars.)

• A) $750,000
• B) $334,600
• C) $212,400
• D) $235,700

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