Newman Long has just learned he has won a $511,300 prize in the lottery. The lottery has given him two options for receiving the payments. (1) If Newman takes all the money today, the state and federal governments will deduct taxes at a rate of 48% immediately. (2) Alternatively, the lottery offers Newman a payout of 20 equal payments of $37,100 with the first payment occurring when Newman turns in the winning ticket. Newman will be taxed on each of these payments at a rate of 26%.
