Are you able to answer this in terms of how to solve using a financial calculator? What to enter for [N, I/YR, PV, PMY, FV] as well as how you determined these numbers? Please verify answer below and explain any discrepancies.

Question:

You just inherited $1,000,000. Instead of taking a lump sum, a financial planner has suggested two additional options. First, you invest in an annuity that will pay you $125,000 per year for 10 years. The discount rate is 8% for both options. The second option is an annuity that pays you $10,000 per month for 10 years. Of the three distribution options, which is the best?

option 1:PV = $1,000,000

option 2 : N:10, I/YR:8, PMT:125000, PV: unknown, FV:0

PV=$838,730.17

option 3: N:10, I/YR:8, PMT:10000, PV:unknown, FV:0

PV=$67,100.81

Answer is option 1, as it has the highest PV.