The top prize for the state lottery is $115,700,000. You have decided it is time for you to take a chance and purchase a ticket. Before you purchase the ticket, you must decide whether to choose the cash option or the annual payment option. If you choose the annual payment option and win, you will receive $115,700,000 in 25 equal payments of $4,628,000—one payment today and one payment at the end of each of the next 24 years. If you choose the cash payment, you will receive a one-time lump sum payment of $53,355,093.34. If you can invest the proceeds and earn 9 percent, which option should you choose? (Round factor values to 3 decimal places, e.g. 1.521.)

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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The top prize for the state lottery is $115,700,000. You have decided it is time for you to take a chance and purchase a ticket. Before you purchase the ticket, you must decide whether to choose the cash option or the annual payment option. If you choose the annual payment option and win, you will receive $115,700,000 in 25 equal payments of $4,628,000—one payment today and one payment at the end of each of the next 24 years. If you choose the cash payment, you will receive a one-time lump sum payment of $53,355,093.34. If you can invest the proceeds and earn 9 percent, which option should you choose? (Round factor values to 3 decimal places, e.g. 1.521.)

                                                           Lump sum paymentAnnual payment

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