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    Lumpsum or Annuity Option

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    I need help determining which option would be the best choice.

    You have won a lottery and are given a choice on how to collect your winning. You can choice $1,000,000 lump sum or you can choose $80,000 ordinary annuity for the next 30 years. If you earn an interest rate of 8% on your funds, which of the two options should you choose?

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    Solution Summary

    This solution helps go through choosing whether a lumpsum or annuity option is the better choice within the given scenario.