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Last Tuesdays Mega Millions prize was estimated to be $122M. The winner can elect a cash option of $75M today or a 26-year annuity with
Last Tuesdays Mega Millions prize was estimated to be $122M. The winner can elect a cash option of $75M today or a 26-year annuity with annual beginning-of-the-period payments of $4.69. What is the difference between todays present value of the cash option and annuity payout at 5% compounded annually? Calculate your answer as PV(Cash Option) - PV(Annuity Payout).
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