Question: If you won a $1,000,000 scratch ticket from the Massachusetts lottery and they offered you either 20 annual payments of $50,000 or a lump sum

If you won a $1,000,000 scratch ticket from the Massachusetts lottery and they offered you either 20 annual payments of $50,000 or a lump sum payment, how much would the lump sum have to be so that it is equivalent to the $50,000 annual payment stream assuming the current interest rate is 4%?Assume payment is made at the end of each year.

$720,000

$960,000

$1,000,000

$679,500

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