1. You have won the lottery and will receive $20,000 each year for the next 20 years! A financial services company has offered you an upfront payment of $200,000 for the entire income stream. If you estimate the time value of money for you is 5%, would you accept the offer? Explain.

2. A family spends $45,000 on living expenses. If inflation averages 3% over the next 5 years, how much would the family need to spend after 5 years to maintain their standard of living?