This is the response i got from my sis who used to work in finance. I dont know if its right though or answers your question.

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Net present value - Wikipedia, the free encyclopedia

yeah i know how to calculate it, but it takes a while...not as simple as it looks. here is the formula...U try! hahahaha.......and the answer would be to take payments of $200,000 for 5 years because the interest will compound over time. if you took the lump sum the value of the money would be as is today and over 1yr. you would only receive approx. $792,138 dollars vs. $1,338,225.60 over the next 5 years as the interest compounds.
so there.