Question
Suppose you win the lottery when the jackpot amount is $162 million. You can receive the jackpot amount paid out evenly over 26 years or
Suppose you win the lottery when the jackpot amount is $162 million. You can receive the jackpot amount paid out evenly over 26 years or you can elect to take an immediate payment of $95 million, before taxes. Ignore all tax effects. Considering this scenario, which option is most advantageous and why? (Be specific as to any calculations performed.) What other factors should be considered in making your decision?
Important Note: Please be sure your response is based on our course concepts: the time value of money. Your post should include calculations for both payout options using the time value of money, explain your assumptions, and interpret the results of your calculations. You may also discuss any and all other factors that will impact the decision as to which type of payout option you would choose but only after you have completed the calculations necessary to support your response.
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