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Rates of returns on similar-risk investments

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Reference no: EM131167441

You just won a lottery that promises to pay you $1,000,000 exactly 10 years from to today. Because the $1,000,000 payment is guaranteed by the state in which you live, opportunities exist to sell the claim today for an immediate single payment.

What is the least you will sell your claim for if you can earn the following rates of returns on similar-risk investments during the 10-year period?

  • i) 6%
  • ii) 12%

Reference no: EM131167441

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