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You won a 1.5 million lottery. You have two options to get paid on your winnings. OPTION A: receive $20,000 per month at the end
You won a 1.5 million lottery. You have two options to get paid on your winnings. OPTION A: receive $20,000 per month at the end of each month until 60th month, & $30,000 per month from 61st month until 70th month OPTION B: receive 60% of your winning today as a lump sum payment (40% is used toward taxes) OPTION C: receive the total of the winnings at once five years from today If you can earn 12% annual rate with monthly compounding on your investments, which option would you choose? A. Option B B. Option A C. Option D. You are indifferent to the three options as they are all equal in value. E. You are indifferent between option B and C as they both have equal values and higher than option A
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