Choice to receive your winnings in one of two ways

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Reference no: EM131591212

Assume you win the lottery and have a choice to receive your winnings in one of two ways. Option 1 is payments of $50,000 per year for each of the next five years. Option 2 is a single payment of $200,000 immediately. Which of the following statements is most correct?

a. Option 1 is preferable to Option 2.

b. Option 2 is preferable to Option 1.

c. Option 1 and Option 2 are equivalent.

d. There is not enough information to answer this question.

Reference no: EM131591212

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