Suppose you won a special math lottery and were given the following options:

Option A: You are given $10,000 and receive $1,000 every year thereafter.

Option B: You are given $1,000 and receive 10% more each year. So a year later you receive $1,100, the next year you receive $1,210, etc.

1. Which option would you choose? Why? 2. What if the lottery went bankrupt in five years? Are the plans equal? 3. Would you take a one-time payout of $50,000 instead of option A or B? Why or why not?

Question

Suppose you won a special math lottery and were given the following options:

Option A: You are given $10,000 and receive $1,000 every year thereafter.

Option B: You are given $1,000 and receive 10% more each year. So a year later you receive $1,100, the next year you receive $1,210, etc.

1. Which option would you choose? Why? 2. What if the lottery went bankrupt in five years? Are the plans equal? 3. Would you take a one-time payout of $50,000 instead of option A or B? Why or why not?

anonymous · Answer

Should I choose option 1?? I'm not entirely sure but it seems to be a better option.

chris911 · Answer

chose option 2

chris911 · Answer

because 10% will add me over certain amount of years

chris911 · Answer

*MORe

anonymous · Answer

Really? Oh okay. so what if the lottery went bankrupt in five years, are the plans equal? 
Should I take a one-time payout of $50,000 instead of option A or B? Why

chris911 · Answer

yes because they have no money $0 nada lol and I ment option 1 would be the better option to take sorry

chris911 · Answer

yes take the pay out because in 5 years you wont have that amout of money neither from optin A or B

anonymous · Answer

No they would each have money because five years past.... Do you know how many each would have in five years, then I could see if they are equal.... Right? lol

anonymous · Answer

^ that is to the first question about the lottery going bankrupt

chris911 · Answer

in five years for option A you will have 15,000$ and for option B u willha ve like average 2000 $

chris911 · Answer

so in five years neither option A or B will have 50,000$

solomonzelman · Answer

I would choose B b/c I am a young guy and got years and years ..... don't know about others :)

anonymous · Answer

Okay so to answer the questions: I would choose option A because it gives me more money overall. In five years if the lottery were to go bankrupt, option A would have $15,00 while option B only would have about  $2,000. Since neither of these are more than $50,000 i would take the one time ppayment of $50,000 instead of the two options because if the lottery went bankfrupt in five years I would get more money this way. 

Is this correct??

chris911 · Answer

yes!!!!!

anonymous · Answer

i would say that that is correct so i agree with @Chris911

anonymous · Answer

Okayyyy..... Are you sure that in five years option B would only have $2,000? That seems so little.... :/

anonymous · Answer

yes

anonymous · Answer

OKay thanks you guys!! (:

chris911 · Answer

ur welcome