Suppose you hit a progressive jackpot on a 25-cent Fortunemaker slot machine in a casino in Las Vegas and are given the choice of the following prizes:
Prize 1: $200,000 to be received right away, with four additional payments of $200,000 to be received each year for the next four years.
Prize 2: $750,000 to be received right away.
If the interest rate is 3 percent, what is the present value of each prize?
Prize 1: Present value = $200,000 + [$200,000 / (1 + 0.03 )] + [$200,000 / (1 + 0.03 )2] + [200,000 / (1 + 0.03 )3] + [$200,000 / (1 + 0.03 )4 = $943,419.68
Prize 2: Present value = $750,000
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If government removes two people from a prisoner's dilemma setting (and, in the process, requires that the two persons pay taxes for the service that government provides), it holds that on net
A) each of the two persons is better off. B) each of the two persons is worse off. C) one person is better off and the other person is worse off. D) a, b, or c E) none of the above
Answer the next question based on the following consolidated balance sheet for the commercial banking system. Assume the required reserve ratio is 12 percent. All figures are in billions of dollars.AssetsLiabilities & Net WorthReserves$60 Checkable Deposits$150Loans100 Stock Shares135Securities25 Property100?Refer to the above data. The claims of owners in the commercial banking system are equal to:
A. $100 billion. B. $285 billion. C. $150 billion. D. $135 billion.
Which of the following mistakes do consumers commonly commit when making decisions?
a. They take into account monetary costs but ignore nonmonetary opportunity costs. b. They fail to ignore sunk costs. c. They are unrealistic about their future behavior. d. All of the above are mistakes consumers commonly commit when making decisions.
All of the following are aspects of macroeconomics EXCEPT
A. the production decisions of a pharmaceutical firm. B. the U.S. unemployment rate. C. foreign trade. D. the budget deficit of the United States.