You Have a Choice Between a Lottery Lump Sum Payout

question 88

Multiple Choice

You have a choice between a lottery lump sum payout of $3,800,000 today or a series of twenty annual annuity due payments.At a discount rate of 6.00%,how large must the annual annuity due payments be to make you indifferent between the two choices? Use a calculator to determine your answer.

• A)$331,301.32
• B)$351,179.40
• C)$190,000.00
• D)$312,548.41

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Definitions:

Cannon-Bard Theory

A theory of emotion that argues that we experience physiological arousal and emotional feelings simultaneously and independently.

Neck-Level Spinal

Pertaining to the region of the spinal cord that is located at the level of the neck, involving cervical vertebrae.

Two-Factor Theory

A psychological theory that proposes emotions are based on two factors: physiological arousal and cognitive labeling of that arousal.

Polygraph Principle

The polygraph principle is based on detecting physiological changes in the body as a response to questions, used to infer truthfulness.