8-21 Crissie just won the lottery, and she must choose between three award options. She can
elect to receive a lump sum today of $61 million, to receive 10 end-of-year payments of $9.5
million, or to receive 30 end-of-year payments of $5.5 million.
We should choose Bank A since it has a higher EAR.
Assuming that there is a high probability of making a withdrawal during the year, Bank B
might be preferable since it has a shorter compounding period, 1 day, as compared to Ban
Principles of Finance
3 Units [Major Subject]
Meriel S. Balcos
A. Course Description
Intended for Management Engi
MV equity =number of shares outstanding current stock price