Question

You won the lottery and have a number of choices as to how to take the...

You won the lottery and have a number of choices as to how to take the money. Which choice yields a greater present value? (Use a 10% discount/hurdle rate)

Present Value of an Ordinary
Period Present Value of $1 at 10% Annuity of $1 at 10%
1 .909 .909
2 .826 1.736
3 .751 2.487
4 .683 3.170
5 .621 3.791

Group of answer choices

$65,000 (lump sum) now

$100,000 (lump sum) 5 years from now

$10,000 a year at the end of each of the next 5 years

$90,000 (lump sum) 4 years from now

Cannot be determined with the information provided

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