Question: While you were waiting for your first job interview results to come, you spent several dollars to buy a Georgia Educational Lotto Ticket and were

While you were waiting for your first job interview results to come, you spent several dollars to buy a Georgia Educational Lotto Ticket and were lucky enough to win a $1 million prize. The prize is to be awarded in 20 annual payments of $50,000 each, payable directly to your Bank of America account the end of the year each year. When the news of your winning was out, a person from approached you immediately to offer you the option of receiving a lump sum payment of $400,000 right away, which, from your superb knowledge in accounting, you can invest in an IRA account that pays 12% compounded annually for the coming 20 years.

a.What is the present value of the $50,000 annuity? Use the projected 12% rate as the rate that the alternative IRA account will pay.

b.What should your decision be per the prize you win in lotto? Why?

Please answer Excel Format

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