Bill Jones has just won the state lottery and has the following three payout options for after-tax prize money: (see screenshot below) Answer: A: $450,050B: $454,000C: $672,900D: $750,000

1. $150,000 per year at the end of each of the next six years 2. $304,000 (lump sum) now 3. $500,000 (lump sum) six years from now The annual discount rate is 9%. Compute the present value of the first option. (Round your answer to the nearest whole dollar.) Present value of an ordinary annuity of $1: 8% 9% 10% 1 0.926 0.917 0.909 N 1.783 1.759 1.736 3 2.577 2.531 2.487 4 3.312 3.240 3.170 5 3.993 3.890 3.791 6 4.623 4.486 4.355 7 5.206 5.033 4.868 hs Present value of $1: 8% 9% 10% 0.926 0.917 0.909 2 0.857 0.842 0.826 3 0.794 0.772 0.751 0.735 0.708 0.683 5 0.681 0.650 0.621 6 0.630 0.596 0.564 0.583 0.547 0.513