Answer to Question #66171 in Economics of Enterprise for Kari Stanislaus
Play-2-Win is the latest lottery game in your country, and you happen to be the latest winner of $10.5 million. Your government has a guarantee on the funds and will not be paid before 3 years from today. You can however sell your claim today at a rate of 8 percent for a lump sum cash payment. What is the least amount you will sell your claim?
PV=R/〖(1+i)〗^n PV=10.5/〖(1+0.08)〗^3 ≈8.335 Answer 8.335 million