Given two choices for your prize money

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Reference no: EM131312619

You just won the lottery and you are given two choices for your prize money: (1) A present lump sum of $20 million or (2) $1 million per year that you and your heirs will receive forever, beginning one year from now. If the appropriate interest rate is 5%, which should you choose and why? Note: PV of a perpetuity = C/r

Reference no: EM131312619

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