you are going to retire and must choose to take your retirement benefits either as a lump sum or as an annuity. Your companys benefit financial manager provides you with 2 alternative; An immediate lump sum of $2, 000,000 or an annuity with 20 payments of $200,000 a year, the first payment starting today. The interest rate is 7% per year compounded annually. Which option has the greater present value.

An immediate lump sum of $2, 000,000 is much better option to have

an annuity with 20 payments of $200,000 a year is better option because it provides more money

an annuity with 20 payments of $200,000 a year is not good Option

An immediate lump sum of $2, 000,000, is not good as Annuity option