You have just won the Illinois State Lottery. The government has two payment options from which you can chose:

a. You will receive twenty annual payments of $250,000 with the first payment being made today. All of this income will be taxed at a 40% rate. Taxes will be deducted when the payments are made to you.

b. You will receive a lump-sum payment now and one year from now you will receive $150,000 annually for nineteen years. You will have to pay a 40% tax rate when the payments are made to you.

Required: If your after-tax required rate of return is 8% per annum, how large would the (before-tax) lump-sum payment have to be so that you would be indifferent between the two options?