Research questions and inquiry methods

¶ … won the lottery for 1 million and you had the chance to take a lump sum or payments over 20 years which option would you choose? Why?

I would choose the option of lump sum payment for the obvious reason that money loses part of its value over time: the phenomenon commonly known as the time value of money. Any payment received upfront has a greater present value than deferred or future payments. This preference for lump sum payment, of course, is made on the assumption that there are no differences in the taxes applicable to winning from the lottery whether received in lump sum or in parts, and that the total amount of $1 million remains the same in both cases, i.e., the part payments received over a period of 20 years would add up to $1 million.

For elaboration, consider:

If one takes a loan of $1 million from a lending institution, which is returnable over 20 years in equal installments and the discount rate or rate of interest is 5% per annum, one would have to pay 20 installments of $80,242.59. The total amount thus paid back would be (80,242.59 x 20) = $1,604,851.80 or > $1.6 million. This indicates that $1.6 million received over 20 years in equal parts (assuming a discount rate of 5%) has a present value of just $1.0 million received as lump sum today.

Conversely, if a total amount of $1 million is received in 20 equal installments of $50,000 over 20 years (50,000 x 20 = 1,000,000), it would be equivalent to just $623,110 in present terms (again assuming an annual discount rate of 5%).

These calculations indicate that I would prefer to receive any amount in excess of $623,110 rather than $1 million in 20 years; hence taking a lump sump payment of $1 million upfront rather than the same amount in 20 years is far more preferable.

2. What are the factors that have led to the failure or success of e-business?

In the 1990s, when Information Technology and the Internet were proliferating at a break-neck speed, dot com companies around the world and in the U.S. In particular, mushroomed at an even faster pace. With e-business offering many undeniable advantages over brick-and-mortar companies such as its global reach and interactivity, scores of businesses plunged headlong into the "virtual world" of e-commerce, many of them without proper planning. The result was an inevitable dot com crash in 2000, which has forced corporate America to ponder the factors that lead to the success or failure of e-business; some of these are discussed below:

Factors for Failure:

The number one factor that led to the failure of several e-businesses was product unsuitability. Products that have a low value-to-weight ratio, or products that customers prefer to touch, smell, taste or tyr-on are generally unsuited for e-commerce. It was no surprise, therefore, that online furniture stores such as living.com and Urbandesign.com were among the first major casualties of the dot.com crash. Concern about security -- credit card fraud and identity theft -- is also a major inhibiting factor behind e-business growth. Another reason why many e-businesses have failed in the past is because online shopping denies the consumers some important psychological and social needs such as instant gratification, and talking to the sales staff and other shoppers. Most of all, many e-businesses failed by ignoring the requirements that are common to the success of all businesses -- sound strategic planning, the need for sufficient capital and skilled staff, and high quality market research.