State lottery and option of taking winnings


Question: Michael won the state lottery and had the option of taking his winnings is one of three ways:

a. 175000 cash immediately

b. 25000 cash immediately and six equal installments beginning one year from today with a 3% return

c. Seven equal payments beginning in one year with a 6% return.

Which would be the best option for Michael?

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Accounting Basics: State lottery and option of taking winnings
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