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Joe just won $1,000,000 in a lottery. He plans to build a house, travel and buy lots of CDs. But when he goes to collect
Joe just won $1,000,000 in a lottery. He plans to build a house, travel and buy lots of CDs. But when he goes to collect his prize, he's told that he can't have it all at once. Instead, the lottery officials say they'll pay him $100,000 today, plus $100,000 a year for the next 9 years. That's okay, Joe thinks, $100,000 times 10 payments is still $1,000,000. Or is it? Also consider the following questions for your discussion post:
- How does Time Value of Money play into this scenario?
- Should Joe take the annuity or lump sum option if available? Explain your reasoning.
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