You have recently won the super jackpot in the Illinois state lottery. On reading the fine print, you discover that you have the following two options:

a. You receive \($160,000\) at the beginning of each year for 31 years. The income would be taxed at a rate of 28 percent. Taxes are withheld when the checks are issued.

b. You receive \($1,750,000\) now, but you do not have access to the full amount immediately. The \($1,750,000\) would be taxed at 28 percent. You are able to take

\($446,000\) of the after-tax amount now. The remaining \($814,000\) will be placed in a 30-

year annuity account that pays \($101,055\) on a before-tax basis at the end of each year.

Using a discount rate of 10 percent, which option should you select?