Ralph has been awarded some money in a settlement. He has the option to take a lump sum payment of $425,000 or get paid an annuity of $2,000 per month for the next 25 years. Which is the better deal for Ralph, and by how much, assuming the growth rate of the economy is 5.15% per year? Lump Sum: by $91,772.64 Lump Sum: by $34,251.30 Annuity: by $91,772.64 Annuity: by $34,251.30

Question

Ralph has been awarded some money in a settlement. He has the option to take a lump sum payment of $425,000 or get paid an annuity of $2,000 per month for the next 25 years. Which is the better deal for Ralph, and by how much, assuming the growth rate of the economy is 5.15% per year?   Lump Sum: by $91,772.64   Lump Sum: by $34,251.30   Annuity: by $91,772.64   Annuity: by $34,251.30