When you win the Mega Millions lottery, you can elect to take 30 annual payments or a cash option. The annuity option will pay you the full amount of the advertised Mega Millions jackpot over the next 29 years (30 payments, with the first payment immediately). The annual payments will increase by 5.000% each year. So it is a growing annuity due. Suppose June 20, 2023, was your lucky day, and you were the only winner of the $300 million jackpot! If you choose the annuity, the 30 payments you would receive—ignoring the time value of money—would sum to $300 million. If you choose the cash option, the immediate one-time payout is $156.0 million; assume this value is the present value of the annuity. Also assume the discount rate is 4.007% (this is pretty close to what they actually use). What is the amount of the first payment that you will receive immediately if you choose the annuity option? $ (to nearest $1)

When you win the Mega Millions lottery, you can elect to take 30 annual payments or a cash option. The annuity option will pay you the full amount of the advertised Mega Millions jackpot over the next 29 years (30 payments, with the first payment immediately). The annual payments will increase by 5.000% each year. So it is a growing annuity due. Suppose June 20, 2023, was your lucky day, and you were the only winner of the $300 million jackpot! If you choose the annuity, the 30 payments you would receive—ignoring the time value of money—would sum to $300 million. If you choose the cash option, the immediate one-time payout is $156.0 million; assume this value is the present value of the annuity. Also assume the discount rate is 4.007% (this is pretty close to what they actually use). What is the amount of the first payment that you will receive immediately if you choose the annuity option? $ (to nearest $1)

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 6MC: You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years....

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