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PLEASE show work You have just won a small ball lottery! This lottery offers two options: annuity and lump sum. If lump sum, you receive

PLEASE show work

You have just won a small ball lottery! This lottery offers two options: annuity and lump sum. If lump sum, you receive $100,000 now. If annuity, it will pay you $10,000 annually for 20 years, interest rate is 5%. a. What is the present value of this annuity? b. Is the imbedded interest rate for the lump sum option higher or lower than the annuity option? Briefly provide your rationale based on PV of annuity.

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