About the state lottery

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Assume that you just won the state lottery. Your prize can be taken either in the form of $35,000 a year received at the end of the next 25 years or as a single amount of $500,000 paid immediately. If you expect to be able to earn an annual rate of 5 percent compounded annually on your investments over the next 25 years, ignoring taxes and other considerations, which alternative should you take? Why?

Reference no: EM131464445

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