Question
A lottery offers two options for the prize.
Option A: $1000 a week for life.
Option B: $600 000 in one lump sum.
The current expected rate of return for large investment is 3%/a, compounded monthly.
a. At what point in time is Option A better than Option B?
b. To answer (3b), did you assume that the winner would never spend any of that money? Write a brief reflection about which option you would choose, and why (pay attention to the math, but reflect upon how much money you would want to be spending as opposed to saving).
Option A: $1000 a week for life.
Option B: $600 000 in one lump sum.
The current expected rate of return for large investment is 3%/a, compounded monthly.
a. At what point in time is Option A better than Option B?
b. To answer (3b), did you assume that the winner would never spend any of that money? Write a brief reflection about which option you would choose, and why (pay attention to the math, but reflect upon how much money you would want to be spending as opposed to saving).
Answers
Reiny
similar to
https://www.jiskha.com/questions/1603746/lottery-offers-two-options-for-the-prize-7-Option-A-1000-a-week-for-life-Option
https://www.jiskha.com/questions/1603746/lottery-offers-two-options-for-the-prize-7-Option-A-1000-a-week-for-life-Option
A
Don't see how that's supposed to help me:(
Leo Galleguillos
Check out the response to the other question. Does it help you? If not, let us know where you're getting stuck!
Reiny
Oh, for heaven's sake, it is the same question!
A
It doesnt help me:(