Edgar just won the lottery. He is given an choice of two options. He can take $420000 right now or he can take $600000 five years from now. Assuming that Edgar is going to invest the lump sum and can earn 6.4% compounded monthly on his investment today, what should Edgar do? Should he take the lump sum of $420000 right now or wait five years and take the pay out of $600000?

Edgar just won the lottery. He is given an choice of two options. He can take $420000 right now or he can take $600000 five years from now. Assuming that Edgar is going to invest the lump sum and can earn 6.4% compounded monthly on his investment today, what should Edgar do? Should he take the lump sum of $420000 right now or wait five years and take the pay out of $600000? Find the future value of the lump sum five years from now: S Preview How much interest would Edgar earn on the lump sum pay out of $420000 if he invested it for five years: $ Preview Which is the better investment and why? Edgar should take the lump sum now because he'll earn interest on it during the next five years. Edgar should take the lump sum now because it's future value in five years is worth more than the pay out is five years from now. Edgar should take the pay out five years from now because it will be worth more than the future value of the lump sum he would get now. What does the lump sum need to be in order for it to be worth the same amount today as the pay out Edgar will get in five years assuming that the same interest ruls apply? $ Preview