Assume you won the lottery and that you have two options for receiving the prize money. You can receive $$300,000$ today or receive payments of $$2,700$ a month for $20$ years. If you can make a nominal $8\%$ return, which option should you take and why? $($Hint To compare investments involving cash flows, you always compare the present value of the future cash flows to identify the most attractive option.$)$

Multiple Choice

The $$2,700$ per month. It is better to have payments spread out than recelve a lump sum.

The lump sum today. The present value of the lump sum is greater than the payments.

The $$2,700$ per month. The present value of the payments is greater than the lump sum.

The lump sum today. It has greater earnings potential.