Alan Long Has just learned he has won a $509,500 prize in the lottery. The lottey has given him two options. lump sum payout. Present value of an annuity payout.

Compute the present value of the cash flows for lump sum payout. (Round answer to 0 decimal places, e.8. 458,581.) Lump sum payout Assuming Alan can earn an 11% rate of return (compounded annually) on any money invested during this period, compute the present value of the cash flows for annuity payout. (Round factor values to 5 decimal places, es.125124 and final answer to 0 decimal places, es. 458,581.) Present value of annuity payout \$ Which pay-out option should he choose? Alan Long has just learned he has won a $509,500 prize in the lottery. The lottery has given him two options for receiving the payments. (1) If Alan takes all the money today, the state and federal governments will deduct taxes at a rate of 47% immediately. (2) Alternatively, the lottery offers Alan a payout of 20 equal payments of $41,800 with the first payment occurring when Alan turns in the winning ticket. Alan will be taxed on each of these payments at a rate of 25%. Click here to view factor tables. Compute the present value of the cash flows for lump sum payout. (Round answer to O decimal ploces, e.8.458.581]) Lump sum payout Alan Long has just learned he has won a $509,500 prize in the lottery. The lottery has given him two options for receiving the payment If Alan takes all the money today, the state and the federal government will deduct taxes at a rate of 47% immidiately Alternatively, the lottery offers Alan a payout of 20 equal payments of \$41,800 with the first payment occurring when Alen turns in the winning ticket. Alan will be taxed on each of these payments at a rate of 25% 1) 509,500,47=239,465509,500239,465=270,035=Lumpsumpayout 2 Assuming Aban can earn an 11% rate of return Ccompounded annually) on any money invested during this period, compute the present value of the cash flows for annuity payout n=20i=11% 41,800.25=10,45041,80010450=31,350 Present value of an Annuity due of 1(n=20L=11%)=8.8392 31,350(8.83929)=277,111,74 Which pay-out option should he choose Annuity payout, because it has more cash inflow