Your client just won the lottery and has the option of receiving $1 million today or $100,000 per year for 20 years. What is your recommendation assuming a 9% discount rate? What is your recommendation assuming a 7% discount rate?
Take the $1 million payout if the discount rate is 9%; take the annuity payout if 7% is the discount rate
Take the $100,000 annuity payout in either discount rate scenario
Take the $1 million payout in either discount rate scenario
Take the annuity payout if the discount rate is 9% take the $1 million payout if the discount rate is 7%