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Randy just won the Powerball Jackpot for $5,000,000 Randy has the option to take a lump sum payment of $3 million now or receive payments
Randy just won the Powerball Jackpot for $5,000,000 Randy has the option to take a lump sum payment of $3 million now or receive payments of $200,000 at the end of the year for the next 30 years or receive a one-time payment of $5,000,000 in 15 years. Assuming rate of 7% and ignoring taxes, should Randy choose the lump sum payment now, the annuity payments, or the lump sum payment in 15 years? Below are present and future value factors at 7%. Periods Future Value of $1 Present Value of $1 Future Value of an ordinary annuity Present Value of an ordinary annuity Multiple Choice $5,000,000 $2,542,000 $3,753,000 10 1.96715 0.50835 13.8164 $1,812,000 702358 What is the present value of taking the lump sum payment of $5,000,000 in 15 years? (Round answer to the nearest thousandths) 15 25 2.75903 5.42743 0.36245 014602 25.1290 63.24090 9.10791 11.65358 30 7.61226 0.13137 94.4608 12.40904
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