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betterway betterway
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7 years ago
A lottery administrator has just completed the state's most recent $50 million lottery. Receipts from lottery sales were $50 million and the payout will be $5 million at the end of each year for 10 years. The expenses of running the lottery were $800,000. The state can earn an annual compound rate of 8 percent on any funds invested.
(a)   Calculate the gross profit to the state from this lottery.
(b)   Calculate the net profit to the state from this lottery (no taxes).
Textbook 
Principles of Managerial Finance

Principles of Managerial Finance


Edition: 14th
Authors:
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#1
Valued Member
7 years ago
Lottery revenue = $50,000,000
Cost of payout= $50,000,000 x 6.710= $33,550,000
Gross profit = $16, 450,000
a) Operation expense =$800,000
b) Net profit=$15,650,000
betterway Author
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#2
6 years ago
Thank you for providing the right answer every time
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