You just won the lottery! Which would you rather have and why? $2,500,00 right now or $500,000/year for 6 years assuming a 8% required and you are paid installments at the end of the year.
a. Both options are equally desirable
b. Neither option, we don’t want to pay taxes on the winnings
c. Up-front $2.5 million payment, because the value is greater than PV of installment plan
d. Instalment plan because the PV is greater than $2.5 million e. Installment plan, because the FV is greater than $2.5 million