You just won a $20 million lottery. You can choose either receiving $8 million today or $800,000 per year for 25 years. Assuming you think you, can earn 8% per year on your investments, compounded annually, which of these alternatives is preferable?
A) $8 million lump sum is preferable because the annuity is worth $2,920,358.
B) $8 million lump sum is preferable because the annuity is worth $7,854,518.
C) Annuity is preferable because it is worth $8,539,821 to you.
D) Annuity is preferable because it's worth $20 million
Correct Answer:
Verified
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