What have you won if the rate of discount is increased

Reference no: EM13207861

1. if the rate discount is 20 percent, A. would you rather receive $ 100 today or $ 120 in one year ?
B. would you rather receive $ 205 today or $ 240 in one year ?
C. would you rather receive $ 500 in one year ?

2. you have just won a $ 25 million lottery prize, which pays you 1 million (tax free) every year fot the next 25 years. have you really won $ 25 million? what have you won if the rate of discount is 5 percent ? (note;you will get your first million payment today and your last $ 1 million payment 24 years from now.

Reference no: EM13207861

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