You Have a Choice Between a Lottery Lump Sum Payout

question 102

Multiple Choice

You have a choice between a lottery lump sum payout of $10,000,000 today or a series of twenty-five annual annuity payments (first payment one year from today) .At a discount rate of 6.50%,how large must the annual annuity payments be to make you indifferent between the two choices?

• A)$819,814.81
• B)$873,102.77
• C)$769,779.17
• D)$400,000.00

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Definitions:

Residuals

The differences between observed and predicted values in a regression analysis, indicating the error in predictions.

Regression Analysis

Regression analysis is a statistical method for estimating the relationships among variables, often used to predict the outcome of one variable based on the value(s) of another.

Crime Rates

A measure of the number of crimes committed per unit of population or geographic area within a specific period.

Cases

Instances or examples of a phenomenon being studied.