Question: u Problem 1. You have won a jackpot in a lottery. You have the following two options: a. You will receive 26 annual payments of

u Problem 1. You have won a jackpot in a lottery. You u

Problem 1. You have won a jackpot in a lottery. You have the following two options: a. You will receive 26 annual payments of 107,500 with first payment delivered later today. The income will taxed at 28%. The taxes will be withheld when the cheques are issued. b. You will receive $227,900 today and you will not have to pay taxes on this amount. In addition, beginning one year from today, you will receive $86,000 each year for next 25 years. The cashflow from this annuity will be taxed at 28%. If the appropriate discount rate is 11%, then what is the best option for you in terms of time value of money

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