You have recently won the super jackpot in the Washington State Lottery. After reading the fine print, you discover that you have the following two options:

a. You will receive 31 annual payments of $300,000, with the first payment being delivered today. The income will be taxed at a rate of 28 percent. Taxes will be withheld when the checks are issued.

b. You will receive $750,000 now, and you will not have to pay taxes on this amount. In addition, beginning one year from today, you will receive $250,000 each year for 30 years. The cash flows from this annuity will be taxed at 28 percent.