Against the odds, you won the New York State Lottery. The jackpot was advertised as $40 million. As the winner, you are entitled to payments of $2 million at the beginning of each year for 20 years ($2 million x 20 years = $40 million).

a. If you know that you can earn 5% on your savings per year, how much is the lottery prize worth to you?

b. They offer you $25 million to take the prize now. Do you take the $25 million one-time payout?