Since I'm 77 years old, I'll take the $500,000 immediately. I won't live another 25 years.
Which option do you prefer?
you have won a lottery with two option.
A: take 500000 immediately,
B: take 40000 at the end of every year 1000000, over a period of 25 years.
Required rate of return is 5%
Q1. what option would you prefer?
Q2. What will be your answer if rate of return is 7%
Q3. At what rate of return will be indifferent to the two options?
1 answer
1 answer