Question

Max has just won some money on a game show! He has the option to take a lump sum payment of $500,000 now or get paid an annuity of

$4,900 per month for the next 10 years. Assuming the growth rate of the economy is 2.9% compounding annually over the next 10 years, which
is the better deal for Max and by how much? (4 points)
са
05
Lump Sum: by $77,462.75
Lump Sum: by $4,145.41
Annuity: by $88,000.00
Annuity: by $4,145.41

Answer 1

The second option annually

Explanation:

(4,900×12)×10 the multiply by 2.9%. Take that number and add on every 10 years