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Angelica is already trying to decide what to do with future Lottery winnings, but she hasn't won yet. The drawing this Saturday has a projected
Angelica is already trying to decide what to do with future Lottery winnings, but she hasn't won yet. The drawing this Saturday has a projected lump sum payout on $4,560,000. Alternately, the winner could accept an annual payout of $400,000 for the next 20 years. Angelica who is 25 years old, estimates that the comparable investment could earn at 12% return in the current market.
(a) which payout option should Angelica choose when she wins the lottery?
PV of annual payment ?
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