Question
You are lucky to win the lottery. The prize is 2 million. You have the option (1) to receive a single amount only once, (2)
You are lucky to win the lottery. The prize is 2 million. You have the option (1) to receive a single amount only once, (2) to receive an identical annuity each year, for 20 years. Ignore the tax. 4.5% is the discount rate
1. What is the present value of option (1)?
2. What is the present value of option (2)?
3. Which one would you select and why?
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Contemporary Financial Management
Authors: R. Charles Moyer, James R. McGuigan, Ramesh P. Rao
14th edition
1337090581, 978-1337090582
