Suppose Sally wins the Publishers Clearinghouse $10 million sweepstakes (not the future value). The money is paid in equal annual installments of $500,000 over 20 years. If the appropriate discount rate is 5%, how much is the sweepstakes actually worth today? And if Publishers Clearinghouse offered you $5 million today, is that offer more or less valuable than the value of the annuity? A) $6,546,789; offer is less B) $10,000,000; offer is less C) $6,231,105; offer is less D) $4,121,212; offer is more E) none of the above
