The Winner of the Mega Millions Lottery Game Can Choose

Multiple Choice

The winner of the Mega Millions lottery game can choose to accept a one-time payout of $163.68 million or receive $11 million per year for 20 years. Using the tables shown and assuming the interest rate is 3 percent, the state: $\begin{array}{|r|l|}\hline\begin{array}{c} \text { Annuity Table } \\ \text { (value now of \$1 Per year To be } \\ \text { received for x-years) } \\\begin{array}{c|c|c|c}\hline {\text { Year }} & \mathbf{3 \%} & \mathbf{4 \%} & \mathbf{6 \%} \\\hline 10 & 8.53 & 8.11 & 7.36 \\\hline 15 & 11.94 & 11.12 & 9.71 \\\hline 20 & 14.88 & 13.59 & 11.47 \\\hline 30 & 19.60 & 17.29 & 13.76 \\\hline\end{array}\end{array}& \begin{array}{c} \text { Present Value Table } \\ \text { (Value now to \$ 1 to be received} \\ \text { x-years un the future) } \\\begin{array}{c|c|c|c}\hline \text { Year } & \mathbf{3} \% & \mathbf{4 \%} & \mathbf{6 \%} \\\hline 10 & 0.74 & 0.68 & 0.53 \\\hline 15 & 0.64 & 0.56 & 0.42 \\\hline 20 & 0.55 & 0.46 & 0.31 \\\hline 30 & 0.41 & 0.31 & 0.17 \\\hline\end{array}\end{array}\\\hline\end{array}$

A) prefers to pay the lump sum because it saves about $100 million.
B) probably does not care-it has set the lump sum equal to the present value of the payments over time.
C) prefers to pay over time because it will save money.
D) probably does not know which is better because the two cannot be compared.