Do you think there are investors who would prefer the annuity as opposed to your $500 million in your previous example? Explain

Choosing a lump-sum amount of the lottery winnings will be beneficial because the present of value lump sum taken today will be higher than the annuities received at the regular interval. The lump-sum amount taken can be invested immediately in other investment opportunities offering a higher yield. Clearly, a lump sum payment is preferred over annuity because the present value is more than future value for an example, when 500 million is paid in a lump sum, then the present value is 500 million But when paid in annuity then the present value is less than500 million Thus lump sum payment is preferred.