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Business, 21.10.2020 16:01 foreignev

Suppose you won a $77,000 after-tax cash prize in the lottery. You want to start a new business that you think will lose money for a while, after which it will be up and running and bringing in big bucks. You plan to invest the funds immediately in securities that are expected to earn 8% per year. Suppose you would need only $19,000 per year during the start-up period. How long could you operate before you would require cash from the new business, i. e., how long could you receive payments of $19,000 per year? The first withdrawal will be made a year from today, and your answer will contain a fraction of a year.

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