Question:
You have won the lottery! The lottery bureau is giving you two options. Choice A pays $1,000,000 immediately. Choice B pays $1,750,000 at the end of 5 years. Using a discount rate of 5%, based on present values, which option do you choose? Using the same discount rate of 5%, based on future values, which do you choose? Which is the better choice only considering the time value of money - not your current personal need. Separate answers for present value and future value.