You Win the Lottery Congratulations! You have just won the Powerball jackpot. You have option for accepting 57 million dollars in a lump sum or receiving an annual payout of 3 million dollars for 30 years. Which option yields more money depends on interest rates. The amount of money you would need (the present value P ) to purchase an annuity that carries an APR of r as a decimal and pays 3 million dollars per year for 30 year is given by
- a. Make a graph that shows both P and target value of 57. Use a horizontal span of 0 to 0.1.
- b. What interest rate corresponds to a present value of 57 million dollars? Round your answer as a percentage to one decimal place.
- c. You are able to find an annuity that pays an APR of 4%. Should you take the lump sum or the yearly payout?
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