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You just won a $20 million lottery. You can choose either receiving $8 million today or $800,000 per year for 25 years. Assuming you think
You just won a $20 million lottery. You can choose either receiving $8 million today or $800,000 per year for 25 years. Assuming you think you, can earn 8% per year on your investments, compounded annually, which of these alternatives is preferable?
a) $8 million lump sum is preferable because the annuity is worth $2,920,358
b) Annuity is preferable because its worth $20 million
c) $8 million lump sum is preferable because the annuity is worth $7,854,518
d) Annuity is preferable because it is worth $8,539,821 to you
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