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Question

Gabrielle just won $2.5 million in the state lottery. She is given the option of receiving a total of $1,300,000 now, or she can elect to be paid $100,000 at the end of each of the next 25 years. If Gabrielle can earn 5% annually on her investments, from a strict economic point of view which option should she take? If Gabrielle takes the prize as an annuity, the present value of the 25-year ordinary annuity is $. (Round to the nearest dollar.)