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Problem regarding the market interest rate

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Suppose you win the lottery in 2010 when the jackpot amount is $162 million. You can receive the jackpot amount paid out evenly over 26 years or you can elect to take an immediate payment of $95 million, before taxes. Ignore all tax effects. Assume the market interest rate at the time is 7%.

Considering the above scenario, which option is most advantageous and why? (Be specific as to any calculations performed.) What other factors should be considered in making your decision?

Reference no: EM131212773

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