Pat won a lottery with two options: $1 million per year, at the end of the year, for 25 years or a single cash price of $18 million. If low-risk investments can earn 2.5% compounded annually, which option should Pat choose and what is the advantage in terms of current economic value? Select one: A. 25 year annuity has an advantage of $424 000 B. Lump sum has an advantage of $424 000 C. 25 year annuity has an advantage of $885 000 D. Lump sum has an advantage of $885 000 E. Both options are the same

The correct answer is: 25 year annuity has an advantage of $424 000, Why is it?