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Review problem related to super jackpot

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Reference no: EM132070903

Question: You have recently won the super jackpot in the Washington State Lottery. On reading the fine print, you discover that you have the following two options:

a. You will receive 31 annual payments of $280,000, with the first payment being delivered today. The income will be taxed at a rate of 28 percent. Taxes will be withheld when the checks are issued.

b. You will receive $560,000 now, and you will not have to pay taxes on this amount. In addition, beginning one year from today, you will receive $230,000 each year for 30 years. The cash flows from this annuity will be taxed at 28 percent.

Reference no: EM132070903

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