Evaluating lump sums and annuities crissie just won the


Evaluating lump sums and annuities Crissie just won the lottery, and she must choose between three award options. She can elect to receive a lump sum today of $61 million, to receive 10 end-of-year payments of $9.5 million, or 30 end-of-year payments of $5.6 million. If she thinks she can earn 7% percent annually, which should she choose? If she expects to earn 8% annually, which is the best choice? If she expects to earn 9% annually, which would you recommend? Explain how interest rates influence the optimal choice.

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