1. Assume you have just won the Mega Millions lottery valued at $900 million. You have two disbursement options, you can either take a lump sum of $450 million or you can take annual payments of $40 million for the next 25 years.
a. If you could earn 8 percent, which option would you choose? Why?
b. Would you decision change if you could only earn 6.50 percent instead? Why or why not?
a. If you could earn 8 percent, you would choose the lump sum... View the full answer