Suppose that Maria wins a $7 million lottery and is trying to decide whether to take $2 million all at once or $7 million over 20 years. One bit of information Maria would need to know is what the prevailing _____ will be over the next 20 years.

Question

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Maria needs to know the prevailing interest rate over the next 20 years to make a decision about whether to take the $2 million lump sum or $7 million over 20 years. If the interest rate is high, it may make more financial sense to take the lump sum and invest it, while a low interest rate may make the annuity option more attractive.

Suppose That Maria Wins a $7 Million Lottery and Is