Tom has just won a lottery and has the option of receiving a lump sum payment of $500,000 today, or a 30-year annuity that pays him $30,000 per year, with the first
payment due one year from today. If the interest rate is 4% per year, which option should he choose

Answer rating: 100% (QA)

To determine which option Tom should choose we can compare the present value of the two options usin... View the full answer