You have just won the $12.5M lottery! You are given 3 options to collect your...
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Accounting
You have just won the $12.5M lottery! You are given 3 options to collect your winnings. The annual interest rate is 10% in current market conditions. Which option do you choose, based on the present value of these 3 options? Show your work and explain your calculations.
- Option 1: Receive $10 mil today.
- Option 2: Receive $4M today and $1M for each of the next 8 years.
- Option 3: Receive $1.25M per year for the next 10 years.
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