You just won the lottery. The jackpot is advertised as $600 million. You have two choices...

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You just won the lottery. The jackpot is advertised as $600 million. You have two choices for how to receive the winnings. The prize may be paid as an annual annuity of $20 million over 29 years, with the first payment today and the 30th payment 29 years from today, or as a single lump sum payment of $250 million today. If you expect to earn 6.5% on your investments, which payout option should you choose? O The lump sum payment of $600 million today because it offers the highest present value. O The annual payout of $20 over the next 29 years because it offers the higher present value. O The two options are equivalent once the TVM is considered. O The annual payout of $20 over the next 29 years because the sum of the payments is $600 million while the lump sum is only $250 million. You just won the lottery. The jackpot is advertised as $600 million. You have two choices for how to receive the winnings. The prize may be paid as an annual annuity of $20 million over 29 years, with the first payment today and the 30th payment 29 years from today, or as a single lump sum payment of $250 million today. If you expect to earn 6.5% on your investments, which payout option should you choose? O The lump sum payment of $600 million today because it offers the highest present value. O The annual payout of $20 over the next 29 years because it offers the higher present value. O The two options are equivalent once the TVM is considered. O The annual payout of $20 over the next 29 years because the sum of the payments is $600 million while the lump sum is only $250 million.

Answer rating: 100% (QA)

Answer B The annual payout of 20 over the next 29 years because it offers the higher pres... View the full answer