You won a $50 million dollar state lottery today! Upon winning, you were informed that you could choose to receive the prize money in one of the following two ways:

1) 25 payments of $2 million per year starting today

2) $30 million dollars paid today

Assume the market interest rate at this time is 7%. Which option should you take? In other words, which option has the higher total present value? What is the difference between the present values of the two options?

Answer rating: 100% (QA)

To determine which option has the higher total present value we need to calculate the present value ... View the full answer