Pricilla Is Considering Buying a Lottery Ticket Required:
Compute the Present Value of the Amounts to Be

Essay

Pricilla is considering buying a lottery ticket.She has to decide whether she wants to receive an immediate lump sum payment based upon $50, 000, 000 or 20 equal annual payments of $2, 500, 000.The annual payments begin the day after the lottery is won.
Below are compound interest amounts for 10% and 20 periods taken from the appropriate tables.
$\begin{array}{lr}\text {Future value of a lump sum }&6.723\\\text {Present value of a lump sum }&.149\\\text {Future value of an ordinary annuity }&57.275\\\text {Present value of an ordinary annuity }&8.514\\\text {Present value of an annuity due }&9.365\\\end{array}$
Required:
Compute the present value of the amounts to be received under each alternative plan.