Congratulations , you've just won the $ 1.400.000 state lottery ! The lottery commission offers you the choice of $ 86,000 per year for 20 years or a one - time , lump sum payment of $ intensions are to save all of the lottery winnings ( regardless of annual cash flow or lump - sum ) for retirement in an account that eams 5.00 % annually , which payment option should you choose?

. Take the lump - sum payment now because the present value of the annuity is less than the lump - sum payment You are indifferent between the lump sum or annuity payment because the present value of the annuity is less than the lump - sum payment Choose the annual payment because the present value of the annuity is greater than the lump - sum payment . You are indifferent between the lump - sum or annuity payment because the present value of the annuity is greater than the lump - sum payment . the lump - sum payment now because the present value of the annuity is greater than the lump - sum payment .