Cassie just won the lottery, and she must choose between 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 would 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 the optimal choice?