Morgan John has just learned he has won a $2,800,000 prize in the state lottery....
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Morgan John has just learned he has won a $ prize in the state lottery. He has two options for receiving the payments: If Morgan takes all the money today, the state and federal governments will deduct taxes at a combined rate of immediately. Alternatively, the lottery offers Morgan a payout of equal payments of $ with the first payment occurring when Morgan turns in the winning ticket. Morgan will be taxed on each of these payments at a rate of Assuming Morgan can earn an rate of return compounded annually on any money invested during this period. k here to view factor tables Compute the present value of the cash flows for the lump sum payout. Lump sum payout $ Compute the present value of the cash flows for the annuity payout. Round factor values to decimal places, eg and final answer to decimal places, eg Present value of annuity payout $ Which payout option should he choose? 
Morgan John has just learned he has won a $ prize in the state lottery. He has two options for receiving the payments: If Morgan takes all the money today, the state and federal governments will deduct taxes at a combined rate of immediately. Alternatively, the lottery offers Morgan a payout of equal payments of $ with the first payment occurring when Morgan turns in the winning ticket. Morgan will be taxed on each of these payments at a rate of Assuming Morgan can earn an rate of return compounded annually on any money invested during this period.
k here to view factor tables
Compute the present value of the cash flows for the lump sum payout.
Lump sum payout $
Compute the present value of the cash flows for the annuity payout. Round factor values to decimal places, eg and final answer to decimal places, eg
Present value of annuity payout
$
Which payout option should he choose?
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