pm.4 You win the $2 million Georgia lottery. They promise you a payout of $100,000 a year for 20 years. Knowing some finance you ask them for a lump sum payment today of $1.5 million instead of the 20 yearly installments. You immediatelytake $100,000 out of the lump sum of $1.5 million and invest the rest for 19 years at a rate of 5%. If you withdraw $100,000 a year out of this investment for the next 19 years, how much will you have at the end of that period? Wasyour idea a better way to take the payments? Explain your answer.

Total amount=$1.5 millionToday amount=$100000Period=n=19yearsInterest rate=5%

You win the $2 million Georgia lottery. They promise you a payout of $100,000 a year for 20 years. Knowing some finance you ask them for a lump sum payment today of $1.5 million instead of take $100,000 out of the lump sum of $1.5 million and invest the rest for 19 years at a rate of 5%. If you withdraw $100,000 a year out of this investment for the next 19 years, how much will y your idea a better way to take the payments? Explain your answer.

You win the $2 million Georgia lottery. They promise you a payout of $100,000 a year for 20 years. Knowing some finance you ask them for a lump sum payment today of $1.5 million instead of take $100,000 out of the lump sum of $1.5 million and invest the rest for 19 years at a rate of 5%. If you withdraw $100,000 a year out of this investment for the next 19 years, how much will y your idea a better way to take the payments? Explain your answer.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 16P

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