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Congratulations! You have won the Lottery For Life and are the proud winner of $1,000 per week for the rest of your life!! You have the option of accepting a cheque for $1000 per week until you die, or reach the age of 75, whichever comes sooner. Alternatively, you may accept a cash payout of $2 million now.+ u5 R% W8 Q# ~- K$ b
a) Calculate the amount of money that the Alberta Lottery Corporation must keep in the bank to be able to pay the weekly prize.
, X; Y5 x: i" T ^Assume the following:
# e& ?6 p* A/ v$ H7 [7 K9 D$ H- r = 0.06 (6 percent)
' u( S1 S. C1 D) D7 b6 h# L/ p/ G- Interest is paid annually to the Lottery Corporation |
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