The phone rings. You answer, "Hello." Is this Billy Bob?" "Yes, it is." "This is Ed McMahon. Congratulations! You have just won the Just Kidding Clearing House sweepstakes! How would you like us to pay you?"
You ponder over the best choice of accepting your winnings:
1. Equal payments of $250,000 at the end of each year for twenty years
2. A lump-sum payment of $2,400,000 today
3. A lump-sum payment of $100,000 today and payments of $400,000 at the end of every year for 10 years
All earnings can be invested at 10 percent. Make a choice of one of the three options. Show calculations.

Question

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The Answer of The phone rings. You answer, "Hello." Is this Billy Bob?" "Yes, it is." "This is Ed McMahon. Congratulations! You have just won the Just Kidding Clearing House sweepstakes! How would you like us to pay you?"
You ponder over the best choice of accepting your winnings:
1. Equal payments of $250,000 at the end of each year for twenty years
2. A lump-sum payment of $2,400,000 today
3. A lump-sum payment of $100,000 today and payments of $400,000 at the end of every year for 10 years
All earnings can be invested at 10 percent. Make a choice of one of the three options. Show calculations.

The Phone Rings