Assume that you just won the lottery. Your prize can be taken either in the form of $ 80,000 at the ned of the next 20 years (1,600,000 over 20 years) or as a single amonut if $ 687,000 paid immediatly.
A) If you expect to be able to earn 4% annually on your investments ovwr the next 20 years, ignoring taxes and other condierations, which alternativly should you take?
B) Would your decision in part A change if you earned 6% over the next 20 years?
C) On a strictly economic basis, at approximatly what earnings rate would you be indifferent between the two plans
D) What is both of their present vaules?
Annually?
Lump Sum?