Solved: Assume the going rate of interest is currently 70 all else, Finance Basics

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Assume the going rate of interest is currently 70 all else

Suppose that Mr. X just won the lottery. He can claim his winnings in one of two ways. Option A: He can take a lump sum of $20,000,000 today, or Option B: he can take a 20 year annuity that pays $1,700,000 at the end of each year, starting next year. Assume the "going rate of interest" is currently 7.0%. All else equal, which of these two options provides a higher rate of return?

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