The PowerBall and MegaMillions lotteries attract a lot of attention whenever the prize exceeds $300 million. Not long ago the prize was reported to be $455 million, payable in either 25 equal installments, beginning immediately, or as a single payment of $269.4 million. All amounts are before taxes, and taxes should not be part of the decision.

a. Compute the interest rate the lottery uses to determine the choice of prizes.

b. As a financial manager, if you won, how should you decide which way to receive your prize? Explain your reasoning.