Reference no: EM13728459
Penny just won the state lottery that offers a choice of payment. She may opt for either receiving $1,000,000 today or $2,000,000 at the end of ten years. If she can invest her funds at 5% annually, which is better choice?
A. The immediate payment since the present value of the $2,000,000 payments is 1,200,000.
B. The later payment since $1,000,000 invested at 5% for ten years will be worth $1,500,000
C. The later payment since the present value of the $2,000,000 payment is $1,227,827.
D. The earlier payment since the present value of the $2,000,000 payment is $876,000
E. The earlier payment since the future value of $1,000,000 in ten years is $1,628,894
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