Howie Long has just learned he has won a $500,000 prize in the lottery. The lottery has given him two options for receiving the payments. (1) If Howie takes all the money today, the state and federal governments will deduct taxes at a rate of 46% immediately. (2) Alternatively, the lottery offers Howie a payout of 20 equal payments of $36,000 with the first payment occurring when Howie turns in the winning ticket. Howie will be taxed on each of these payments at a rate of 25%. (Use the table below.)

TABLE 6-5 PRESENT VALUE OF AN ANNUITY DUE OF 1 10% 1196 12% 15% 90909 2.71252 3.40183 3.85498 1.91743 2.75911 3.53130 4.23972 289005 4.037353.28323 4.60478 2.78328 3.57710 4.31213 2.62571 3.44371 4.10245 4.16986 479079 5.230545.58375.48732 5.3552 5.71220 5.96764 5.77158 4.99271 4.88965 5.62288 6.74664 7.24669 5.48592 6.03295 6.53482 5.11141 5.35526 469590 5.86842 633493 6.53705 5.967645.16042 6.3282548732 6.14612 6.75902 10 7.1445 .20652 437 6.58315 7 49506 .49236742355 6.72448 6.01877 6.85022 6.2337 6.88923693770 642062 7.71008 8.13896 7.41766 7.80519 8.16073 623371 7.81369 8.10336 .749877.19437 8.78615 8.36009 7.98187 7.62817 9.08069 9.31258 9.85137 10.12164 10.37189 8.82371 9.02155 41 19087 8.37916 8.54879 8.70162 7.97399 8.11963 8.24967 8.36578 6.84737 6.95424 7.04716 7.12797 9.95012 10.81815 11.01680 11.20074 11.37108. 7.25933 9.51356 .0750 8.64485 3884 9.64869 7.31246 7.35866 9.17574 10.44243 10.58021 10.70681 9.77154 9.98474 10.07704 10.23722 8.71843 8.78432 25 10.82258 10.160 9.5470 6.984 7.55088 8.84314 .42174 9.48806 11.67478 7.46415 26 10.92897 11.93518 12.05108 12.15841 11.11613 11.1 9.60162 9.85011 7.51353 7.53351 28 29 30 9.02181 9.05518 9.11159 12.25778 34280 10.52638 .80054 7.56598 7.57911 11.27365 31 9.69379 9.73315 9.76860 10.47901 12.34980 12.43500