Most state lotteries in the U.S. give Lottery winners of particularly large prizes the option of taking the total prize as an annuity over several years, usually 10-20, or as a discounted lump sum now. Based on what we are studying this week and your prior knowledge and research, what are the various factors that should be considered in choosing either alternative if the goal is to maximize the total benefit to the Lottery winner? What are the risks associated with each alternative?
The text presents a mathematical relationship between present value and future value. What does this relationship suggest to potential investors as far as setting important priorities? What is the most important determinant of meeting retirement goals?