IV. Discounting and Annuities, redux

Congratulations! You have won the lottery! You are offered a choice of $1,000,000 up

front or an annuity of $100,000 per year for 20 years. Your personal discount rate is 0.04. If

you are an economically rational actor, what will you do?

Use the FV function in Excel to figure out the appropriate decision, and report the future

value of both the immediate payment and the annuity. Show the work that you used to

calculate the answer and interpret.