lottery winner has a decision between a lump sum of $1,000,000 or a 20 year annuity of $100,000 paid at the end of each of the next 20 years. If the lottery winner could invest or borrow funds at an annual effective interest rate of 5%, which alternative would be preferred and by how much in present value?

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A: Here,Lottery Prize is $1,800,000Time Period is 20 yearsAnnual Interest Rate is 4.4%

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