A major corporation hires high school students on a part-time basis. It offers a reward of 5,000 to any of its high school seniors who graduate college in four years. What is the present value of that reward to a student who just finished her junior year of high school, assuming a nominal rate of interest of 8?
What will be an ideal response?
Question 2
A state lottery has a Million Dollar Lottery game that pays 1,000 a week for life. Assuming a 6 nominal rate of interest and generously assuming an infinite lifetime, can this game be called a Million Dollar Lottery?
What will be an ideal response?