. Time Value of Money. Walt Zarnoch has won second prize in THE BIG Lottery. Friends who he never knew have offered him several "opportunities of a lifetime." He would like a 14 percent annual return. The lottery prize was a check for \(\$ 300,000\). Among the "opportunities" were:

(1) \(\$ 50,000\) per year for ten years.

(2) \(\$ 400,000\) on the same date in the next U. S. presidential election year.

(3) \(\$ 20,000\) per year for the rest of his life (about 50 years).

(4) A penniless friend told Zarnoch that he wrote him a check for \(\$ 1,000,000\) and has put it "in the mail."

(5) \(\$ 500,000\) to be paid on this same date five years from now.

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After judging uncertainty, which should he select? Explain.