Finance

Assignment Details

Who Wants to Be a Millionaire? 
 

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1. You just won $1 million dollars in the lottery! They offer you two  options for your winnings: a lump sum payment right now, or $100,000 a  year over the next 10 years. Current 10-year interest rates are at 5%,  and the current tax on lottery winnings is 40%.    
   • What is the amount you will receive today with the lump sum option?  
   • Which option would you select? How would you present your argument for your decision in a debate?
2. Sorry, you didn’t win the lottery, but here’s a way you can  still be a millionaire! Starting at age 22, every night you take $5 out  of your pocket and put it in a manila envelope (title it “Lottery  Winnings”). At the end of the year, you place the money from the  envelope in a stock fund with an average interest rate of 10%.   
   • How much will you have in the account when you retire at age 65?  
   • What would be different if you started this plan later in your life?

Your submitted assignment must include the following:

Submit  a double-spaced Word document of 1–2 pages that contains your answers  to the four questions listed in the assignment description, any  calculations you performed, and all formulas that were used. Also, in  the Word document, insert an Excel spreadsheet that shows how you  arrived at your answers, or screenshot of the online calculator utilized  with your answers shown.

The use of 3 scholarly sources is required.