4. 3.58 The multistate Powerball Lottery, worth $182 million, was won by a single individual who had purchased five tickets at $1 each. The individual was given two choices:

Option 1: Receive 26 payments of $7 million each, with the first payment to be made now, with the rest to be made at the end of each of the next 25 years.

Option 2: Receive a single lump sum payment now that would be equivalent to the 26 payments of $7 million each. If the state uses an interest rate of 4% per year compounded annually, the amount of the lump-sum payment is closest to:

1. Less than $109 million 2. $109,355,000 3. $116,355,000 4. Over $120 million