Why is the present discounted value of the prize much less, Econometrics

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Why is the present discounted value of the prize much less

We have all heard about winners of $10 million jackpot lotteries. The winner, however, does not get $10 million in cash on the spot, but rather typically gets a measly $500,000 for twenty years. Why is the present discounted value of the prize much less than $10 million? Calculate the present discounted value if r = 5 percent.

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Econometrics: Why is the present discounted value of the prize much less

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