What amount should bob offer lottery winners currently

Reference no: EM13905599

1. Jonah has the choice of paying Rita $10,000 today or $40,000 in 10 years. Assume Jonah can earn a 12 percent after-tax rate of return. Which should he choose?

2. Bob's Lottery Inc. has decided to offer winners a choice of $100,000 in 10 years or some amount currently. Assume that Bob's Lottery Inc. earns a 10 percent after-tax rate of return. What amount should Bob offer lottery winners currently, in order for him to be indifferent between the two choices?

Reference no: EM13905599

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