ou have just won the state lottery and have two choices for collecting your winn

Question

ou have just won the state lottery and have two choices for collecting your winnings. You can collect $106,000 today or receive $21,200 at the end of each year for the next seven years. A financial analyst has told ou that you can earn 10% on your investments. . Calculate the present value of both the options (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your answers to nearest whole dollar) Present Value Option 1 Option 2 Which altermative should you select?

Explanation / Answer

Present value Option 1 106000 Option 2 103211 =21200*4.86842 Option 1 is preferable

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