Question
Youve just won a minor lottery. You have two options: option 1 is to receive $700,000 today and option 2 is to receive $90,000 at
Youve just won a minor lottery. You have two options: option 1 is to receive $700,000 today and option 2 is to receive $90,000 at the end of every year for 10 years beginning at the end of 2 years from now. Assuming that you can earn 4.5% on your money, what should you do and why?
A) Take option 1 because you earn $12,145 more in todays dollar terms this way.
B) Take option 1 because you earn $18,522 more in todays dollar terms this way.
C) Take option 2 because you earn $12,145 more in todays dollar terms this way.
D) Take option 2 because you earn $18,522 more in todays dollar terms this way.
E) Take option 2 because you earn $10,339 more in todays dollar terms this way
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