You recently won a lottery and have the option of receiving one of the following three prizes: (1) $82,000 cash immediately, (2) $30,000 cash immediately and a six-year annual annuity of $9,000 beginning one year from today, or (3) a six-year annual annuity of $17,000 beginning one year from today. Assuming an interest rate of 7% compounded annually, determine the present value for the above options. Which option should you choose?
A company wants to accumulate a sum of money to repay certain debts due in the future. The company will make annual deposits of $160,000 into a special bank account at the end of each of 10 years. Assuming the bank account pays 8% interest compounded annually, what will be the fund balance after the last payment is made in ten years?