Maximize the present value of the winnings

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Reference no: EM131205085

Suppose you win the lottery and are given a choice to collect either the grand prize of $6 million in 20 annual instalments of $300, 000, or collect an immediate one-time payment of $4 million today. If the interest rate is 5% and that is what you use to discount future earnings, which option should you select to maximize the present value of the winnings?

Reference no: EM131205085

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