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Compute the discount factor the lottery commission

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Reference no: EM132262424

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You win a lottery and the lottery commission will pay you $3 million a year for 10 years. They also offer you a choice to take $18 million as one lump sum payment.

a. What is the long-form expression for this problem if the discount factor is unknown? (Just give the 1st, 2nd, and terminal terms in the equation.)

b. Compute the discount factor the lottery commission used to get the $18 million lump-sum payment?

Reference no: EM132262424

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