EXERCISE 13A–4 Basic Present Value Concepts [LO7] Sally has just won the million-dollar Big Slam…

EXERCISE 13A–4 Basic Present Value Concepts [LO7]

Sally has just won the million-dollar Big Slam jackpot at a gambling casino. The casino will pay her $50,000 per year for 20 years as the payoff.

Required:

If Sally can invest money at a 10% rate of return, what is the present value of her winnings? Did she really win a million dollars? Explain.

 

 

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