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31. You win the lottery. You can get a lump sum of $25,000,000 or receive $2,000,000 a year (at the end of each year) for
31. You win the lottery. You can get a lump sum of $25,000,000 or receive $2,000,000 a year (at the end of each year) for 20 years. You expect to receive interest at 5% (ignore taxes) over the next 20 years.
a. Do you take the lump sum of $25,000,000 or the annuity of $2,000,000?
b. Change the facts. The annuity is paid at the beginning of each year instead of at the end. Now, do you take the lump sum of $25,000,000 or the annuity of $2,000,000?
31. You win the lottery. You can get a lump sum of $25,000,000 or receive $2,000,000 a year (at the end of each year) for 20 years. You expect to receive interest at 5% (ignore taxes) over the next 20 years.
a. Do you take the lump sum of $25,000,000 or the annuity of $2,000,000?
b. Change the facts. The annuity is paid at the beginning of each year instead of at the end. Now, do you take the lump sum of $25,000,000 or the annuity of $2,000,000?
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| Lump Sum | Annuity | ||
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