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?

Assuming that the payments last forever, the present value of the payments is roughly 52,000/.06 = $866,667. Not really a million dollars.

Economics

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