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Winners of the Jackson City Lottery Prize of $10 Million

Question 154

Multiple Choice

Winners of the Jackson City Lottery prize of $10 million are paid $1 million per year for ten years. Paid out in this form, this prize is


A) worth less than $10 million because the payment is deferred over time
B) worth more than $10 million because the payments remain constant for the next ten years
C) worth more than $10 million because the tax burden on the smaller payments is less
D) worth exactly $10 million
E) not worth $10 million only if the interest rate is positive

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