The super jackpot in the washington state lottery

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Reference no: EM131973532

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: 1. You will recieve 31 annual payments of $175,000, with the first payment being delivered today. The income will be taxed at a rate of 28%. Taxes will be withheld when the checks are issued. 2. You will recieve $530, 000 now, and you will not have to pay taxes on this amount. In addition, beginning one year from today, you will receive $125,000 each year for 30 years. The cash flows from annuity will be taxed at 28%. Using a discount rate of 10%, which option should you select?

Reference no: EM131973532

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