If you won $2,5 million in a lottery. You can receive $1.3million now or $100,000 at the end of each of the next 25 years, You can earn 5% annually on the investments . Which is the better option?

To determine which option is better, we need to calculate the present value of each option and compare them.

Option 1: $1.3 million received now.
Option 2: $100,000 received at the end of each of the next 25 years.

To calculate the present value of Option 2, we need to calculate the present value of each $100,000 received at the end of each year using the formula for the present value of an annuity:
PV = PMT * [(1 - (1 + r)^(-n)) / r]
where PV represents the present value, PMT represents the annual payment, r represents the annual interest rate, and n represents the number of years.

In this case, PMT is $100,000, r is 5% (or 0.05), and n is 25.

Using the formula, we can calculate:
PV = $100,000 * [(1 - (1 + 0.05)^(-25)) / 0.05]

Now, compare the present value of Option 1 ($1.3 million) and the present value of Option 2 ($100,000 * [(1 - (1 + 0.05)^(-25)) / 0.05]).

If the present value of Option 1 is greater than the present value of Option 2, then Option 1 (taking $1.3 million now) is the better option. If the present value of Option 2 is greater, then Option 2 (taking $100,000 at the end of each year) is the better option.