Time value of money and the lottery

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Reference no: EM131022007

Time value of money and the lottery. A friend of yours by the name of Pam has asked you for financial advice. She recently won a state lottery and was asked by the lottery officials to choose between the following payout options:

Option 1 - Receive a lump sum payment today of $61 million OR

Option 2 - Receive 30 end-of-year payments of $5.5 million each.

Would your answer to question 1 change if Sam expects a 9% return on his investments instead of 7%? Why or why not?

Reference no: EM131022007

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