1) Assume that you win a lottery and have the following 2 options: (i) First, you can receive $100K at the end of each year during the next 3 years; or (ii) Second, you can receive a lump sum payment today. How much should be this lump sum payment today, which could make this two options are equal? Assume that interest rate is 5%.

A)

$272K.

B)

$300K.

C)

$286K.

D)

$316K.

E)

$279K.

2) Assume that your broker offers you a great investment opportunity:

The investment opportunity will offer you $12,000 at the beginning of every year for twenty years. The first $12000 payment would start today (t=0).

Assume that your opportunity cost of capital is 6% (i.e., r = 6%), how much is the present value of all the cash flows from this investment opportunity?

A)

$141,639.

B)

$129,848.

C)

$137,639.

D)

$145,897.

E)

$143,848.