What is the annual worth of a lottery payout

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Several years ago, a man won $27,000,000 in the state lottery. To pay off the winner, the state planned to make an initial $1,000,000 payment immediately, followed by equal annual payments of $1,300,000 at the end of each year for the next 20 years. Just before receiving any money, the man offered to sell the winning ticket back to the state for a one-time immediate payment of $14,400,000. Use an annual worth analysis. If the state uses a 6%/year MARR, should it accept the man’s offer? What is the annual worth of a lottery payout and the annual worth of a onetime payment?

Reference no: EM13735972

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