You win a jackpot of $1,000,000 from the MI lottery. Which should you take? State your...

 

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You win a jackpot of $1,000,000 from the MI lottery. Which should you take? State your assumptions and show your calculations. Option 1 (cash flow diagram and total amount 10 pt) The lottery rules say that total will be paid out to you in 20 equal annual payments of $50,000 each. You will invest this money at 5% interest per year. Option 2 (cash flow diagram and total amount 10 pt) Alternatively, you can take the lump sum cash value, which is about $500,000 that you will also invest at 5% each year. You win a jackpot of $1,000,000 from the MI lottery. Which should you take? State your assumptions and show your calculations. Option 1 (cash flow diagram and total amount 10 pt) The lottery rules say that total will be paid out to you in 20 equal annual payments of $50,000 each. You will invest this money at 5% interest per year. Option 2 (cash flow diagram and total amount 10 pt) Alternatively, you can take the lump sum cash value, which is about $500,000 that you will also invest at 5% each year.

Answer rating: 100% (QA)

Option 1 Will be paid 20 equal annual payments of 50000 each and invest this money a... View the full answer