You hold a winning ticket from your provincial lottery. It entitles the bearer to receive payments of $50,000 at the end of each of the next 20 years. Given what you know about the time value of money, you should be able to sell this ticket for no less than $1 million in the open market.

Question

Quizplus · Accepted Answer

The present value of the future payments is less than $1 million due to the time value of money, meaning money available now is worth more than the same amount in the future due to its potential earning capacity.

You Hold a Winning Ticket from Your Provincial Lottery