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  3. type 2c: prizes are often not "worth" as much as c

Type 2C: Prizes are often not "worth" as much as claimed. (a) Place a present...

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Accounting

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Type 2C: Prizes are often not "worth" as much as claimed. (a) Place a present value on a prize of $10,000,000 which is to be received in equal payments (i.e., $500,000 each year) over 20 years, with the first payment beginning today. (b) If a broker approaches you and says she would buy your prize today for $6,000,000 cash, would you sell it to her? Why or why not? Assume an annual interest rate of 7} over the 20 years

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