Example on lotteries in the united states, Microeconomics

Assignment Help:

Most lotteries in the United States pay their winnings over time. For illustration, a million-dollar winner will receive $100,000 initially and the rest in equal installments over the next 9 years. On the basis of this information, are the winners truly millionaires? Please, provide a calculation example.

ANSWER: Any million-dollar winner of a lottery who gets the winnings over time is not truly a millionaire if by that term we mean someone who has a total worth of one million dollars. With interest rates at 10% and the winnings to be paid over ten installments, the current value of a million-dollar lottery ticket is no more than $675,902.30. That is the most that any winner would expect to receive when selling the rights to his or her winnings to another investor.


Related Discussions:- Example on lotteries in the united states

Illustrate about the elasticity of substitution, Illustrate about the elast...

Illustrate about the elasticity of substitution. The Elasticity of Substitution: The technical substitution’s marginal rate measures the slope of an isoquant. As well the el

Components of cost, Normal 0 false false false EN-IN ...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Explain abput capitalist class, Q. Explain abput Capitalist Class? Capi...

Q. Explain abput Capitalist Class? Capitalist Class:Group of individuals (which represents just a couple of percent of population in advanced capitalist countries) which contro

Micro., what is the theory of second best? prove the theorem with the help ...

what is the theory of second best? prove the theorem with the help of a diagram.

Moving average methods, Moving Average Methods: Under this methods the movi...

Moving Average Methods: Under this methods the moving average to the sales of the past years is computed. The computed moving average is taken as forecast for the next year or peri

Insurance, Sita expects her future earnings to be worth Rs 100. If she fall...

Sita expects her future earnings to be worth Rs 100. If she falls ill, her expected future earning will be Rs 25, There is a belief that she may fall ill 2 with probability of -3

Draw a graph of the market for reserves, During summer of 2006, China incre...

During summer of 2006, China increased their reserve requirement for the banking system while maintaining a fixed target for the interbank lending interest rate. Draw a graph of th

Cost sharing in higher education - increasing the fees, Cost Sharing in Hig...

Cost Sharing in Higher Education - Increasing the Fees A commonly suggested cost recovery method is to increase the fees charged for the courses in higher education. The share

Chapter 6, (a) Suppose Scientists discover that eating soybeans prevents ca...

(a) Suppose Scientists discover that eating soybeans prevents cancer and heart disease.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd