Your friend has just won the lottery. They have a choice of receiving $250,000 a year for 40 years or a lump sum of $5m. Which is the better alternative assuming a discount rate of 4.25% ? a) Lump Sum of $5,000,000 b) Annual payment of $250,000 c) They are equivalent. fv=250,000(1+4.25%)40=1,321,242.56pv=250,000[1/4.25%1/4.25%(1+4.25%)40]=4.769.318.6