Assume that you won the Lotta Dough Lotto jackpot for $20 million. Fur

Assume that you won the Lotta Dough Lotto jackpot for $20 million. Further assume that you were
offered a choice to receive the $20 million today, or receive it in equal installments of $1 million per
year for 20 years.

According to one of the principles of finance, which would you take?
A) the $20 million in equal installments of $1 million per year for 20 years because it would be
worth more than if you would receive it today
B) the $20 million today because it would be worth more than if you would receive it in equal
installments of $1 million per year for 20 years
C) You would be indifferent as to when you would receive the $20 million since the total number
of dollars received is the same either way.
D) the $20 million in equal installments of $1 million per year for 20 years because you would be
afraid of spending it all right away

ANSWER

B