Stock holds the winning ticket in a state lottery game

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Woodrow Stock holds the winning ticket in a state lottery game. The state offers Woodrow two options to choose from. He can take a one-time cash prize of $4 million, or receive payments of $400,000 a year for 25 years. Explain the interest rate/discount rate conditions that would make these two alternatives exactly identical in the mind of Mr. Stock.

Reference no: EM131354269

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