You have recently won the super jackpot in the Washington State Lottery. After reading the fine print,
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Question:
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 annual payments of $ with the first payment being delivered today. The income will be taxed at a rate of percent. Taxes will be withheld when the checks are issued.
b
You will receive $ now, and you will not have to pay taxes on this amount. In addition, beginning one year from today, you will receive $ each year for years. The cash flows from this annuity will be taxed at percent.
Using a discount rate of percent, what is the present value of your winnings for each option? Do not round intermediate calculations and round your answers to decimal places, eg
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