Dan won the lottery and must select between two options to receive his payout
Option 1: Take a lump sum settlement of $225,000 in the first year after winning
Option 2: Take an annuity of $15,000 per year for 20 years.
Dan's required rate of return is 6%.
Disregard Dan's consumption rate and the reinvestment of any excess funds (savings).
Let PVA represent the present value of annuity.
Which option should Dan choose?
		Lump Sum		Annuity		PVA for a 20 year annuity at 6%
Total Present Value		$225,000					11.47
Dan will select