1. (3pts) Suppose that the Oregon state lottery is offering a choice of prizes this year. Assume that the relevant interest rate is 10%. Calculate the value of each prize. Which one would you choose? (Show all work!) A) $500,000,000 fifty years from today. The value is? B) $850,000 per year forever with the first payment made today. The value is? C) 15 payments of $2,500,000 per year, the 1st payment is made today. The value is? D) Which would you pick? Formulas for Quiz 2 FV = PV(1 + r) Value = T- -,|-6#9'] [1-617] Value = Value = = - PV = Co (1 + r) t=1 -In 1- , PV t = m In in (1 + ) (1 + r) - FVA = C FV = C 7. = c(*= 48 +21 ((1+r) - (1+) r-g EAR = [1+ APRI - 1 APR = periodic rate x m 1 APR = m [(1 + EAR) 1