P5.4(LO 4) Evaluating Payment Alternatives Howie Long has just learned he has won...
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PLO Evaluating Payment Alternatives Howie Long has just learned he has won a $ prize in the lottery. The lottery has given him two options for receiving the payments. If Howie takes all the money today, the state and federal governments will deduct taxes at a rate of immediately. Alternatively, the lottery offers Howie a payout of equal payments of $ with the first payment occurring when Howie turns in the winning ticket. Howie will be taxed on each of these payments at a rate of Instructions Assuming Howie can earn an rate of return compounded annually on any money invested during this period, which payout option should he choose? NOTE: Enter a formula, a cell reference, or a value if you are unable to reference a cell into the yellow shaded input cells. Lump sum alternative $ Annuity alternative Which payout should Howie select? 
PLO Evaluating Payment Alternatives
Howie Long has just learned he has won a $ prize in the lottery. The lottery has given him two options for receiving the payments. If Howie takes all the money today, the state and federal governments will deduct taxes at a rate of immediately. Alternatively, the lottery offers Howie a payout of equal payments of $ with the first payment occurring when Howie turns in the winning ticket. Howie will be taxed on each of these payments at a rate of
Instructions
Assuming Howie can earn an rate of return compounded annually on any money invested during this period, which payout option should he choose?
NOTE: Enter a formula, a cell reference, or a value if you are unable to reference a cell into the yellow shaded input cells.
Lump sum alternative
$
Annuity alternative
Which payout should Howie select?
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