A town offers a lottery. To win the grand prize of $1,000,000,
your ticket needs to...
A town offers a lottery. To win the grand prize of $1,000,000,
your ticket needs to consist of the winning seven numbers chosen
from the set {1, 2, …, 55}. To win the lesser prize of $10,000,
your ticket needs to have exactly five of the seven.
a) What is the probability of winning the grand prize?
b) What is the probability of winning the lesser prize?
c) If a lottery ticket costs $1, what is the expected value of
playing this lottery?
Jack and Diane are lottery winners. They hold the ticket to the
Grand Prize in the “Set for Life” Prize that makes 20 consecutive
annual payments of $50,000 starting immediately. There is one
hitch: the eleventh payment (to be received at the end of year 10)
is not $50,000 but only $20,000 (that is, this payment is $30,000
LESS than the other 20). Which of the following comes closest to
the present value of the prize if interest rates are...
A lottery offers the chance to win a prize of receiving payments
forever starting with $200 for the first payment followed by each
consecutive payment increasing by $250 until the payment size
reaches $700. If you receive a payment every quarter, with the
first in one quarter and interest is earned at j4 = 5%,
what amount must the lottery have in the account today to fund the
prize?
Suppose that you win the Lottery. The stated prize is $402
million. If you agree to take the payout over 30 years in the form
of an annuity due, then each payment equals the stated prize
divided by 30. The first payment will be made to you immediately,
and the remaining 29 future payments will be paid out annually
(beginning one year from today). Alternatively, you can take the
lump sum payout. This payout is calculated as the present value...
The state lottery claims that its grand prize is $2 million.
The lucky winner will receive $200,000 upon presentation of the
winning ticket plus $200,000 at the end of each year for the next
19 years. Assume your own discount rate.
a-Why isn't this really a
million-dollar prize? (5 Points)
b-What would it actually be worth in
dollars to you? (5 Points)
c-What would the 20 yearly payments
need to be for the present value of the lottery to be...
A lottery has a grand prize of $100,000, two runner-up prizes of $12,500 each, four third-place prizes of $2000 each, and six co nsolation prizes of $200 each. If 200,000 tickets are sold for $1 each and the probability of any one ticket winning is the same as that of any other ticket winning, find the expected return on a $1 ticket. (Round your answer to two decimal places.)
You win the grand prize on a game show. You have the following
choices:
Option 1: $1-million dollars paid as a $25 000 annuity every
year over 40 years.
Option 2: The present value of option 1 if the current
interest rate is 4%, compounded annually.
Determine the present value of option 2.
If you can reinvest the $1 000 000 at 5%, compounded annually,
over 40 years how much more money would you have than if you
accepted Option...
While in Mexico, you buy a lottery ticket and win. The award is
5 annual payments of MXN 1,000,000 with the first payment made
today.
The APR interest rate for 4 years of future MXN cash flows is 6%
and for USD cash flows is 2%.
The exchange rate today is MXN19.6/USD. What is the value today
of your winnings in terms of USD? Show the result taking the
present value (PV) in both currencies (hint: determine expected
exchange rates...
Congratulations! You have won the $ 1 million lottery grand
prize. You have been presented with several payout alternatives,
and you have to decide which one to
accept.
The alternatives are as follows:
$1
million today
$1.2
million lump- sum in two years.
$1.5
million lump-sum in five years.
$2
million lump-sum in eight years.
Your cousin, s stockbroker, advises you that over the long-term
you should be able to earn ten percent on an investment
portfolio.
You are intrigued...
A lottery claims its grand prize is $10 million,
payable over five years at $2 million per year. If the
first payment is made immediately, what is this grand prize really
worth? Use an interest rate of 6%.
You win a lottery of Rs.1,000,000/-, you have a choice between
spending the money now or putting it in a bank account for 5 years
that pays you 5% per annum. Calculate the opportunity cost of
spending money now?