Assume that you just won the state lottery. Your prize can be taken either in the form of 44,000 at the end of each of the next 20 years (that is, $880,000 over 20 years) or as a single amount of $455,000 paid immediately.

a. If you expect to be able to earn 55% annually on your investments over the next 20 years, ignoring taxes and other considerations, which alternative should you take? Why?

b. Would your decision in part a change if you could earn 77% rather than 55% on your investments over the next 20 years? Why?

c. On a strictly economic basis, at approximately what earnings rate would you be indifferent between the two plans