Yuma, Arizona, resident Rosalind Setchfield won $1.3 million in a 1987 Arizona lottery drawing, to be paid in 20 annual installments of $65,277. However, in 1989, her husband, a construction worker, suffered serious injuries when a crane dropped a heavy beam on him. The couple’s medical expenses and debt mounted. Six years later, in early 1995, a prize broker from Singer Asset Finance Co. telephoned Mrs.Setchfield with a promising offer. Singer would immediately give her $140,000 for one-half of each of her next 9 prize checks, an amount equal to 48% of the $293,746 she had coming over that period. A big lump sum had obvious appeal to Mrs.Setchfield at that time, and she ended up signing a contract with Singer. Did she make the right decision? The following table gives the details of the two options:

Year  Installment  Year  Installment  ReducedPayment  1988 $65,277 1995 $65,277 $32,639 1989 65,277 1996 65,277 32,639 1990 65,277 1997 65,277 32,639 1991 65,277 1998 65,277 32,639 1992 65,277 1999 65,277 32,639 1993 65,277 2000 65,277 32,639 1994 65,277 2001 65,277 32,639     2002 65,277 32,639     2003 65,277 32,639     2004 65,277       2005 65,277       2006 65,277       2007 65,277