evaluating lump sums and annuities crissie just won the lottery and she must choose 1549844

EVALUATING LUMP SUMS AND ANNUITIES Crissie just won the lottery, and she must choose among three award options. She can elect to receive a lump sum today of $61 million, to receive 10 end-of-year payments of $9 5 million, or to receive 30 end-of-year payments of $5 5 million.

a. If she thinks she can earn 7% annually, which should she choose?

b. If she expects to earn 8% annually, which is the best choice?

c. If she expects to earn 9% annually, which option would you recommend?

d. Explain how interest rates influence her choice.