2) You win the lottery! Your choices are

• Take $25 million today.
• Take $1 million today and $1 million every year for the next 49 years (a total of $50 million)

a) If the interest rate is 0.1% compounded annually, which would you prefer?

b) If the interest rate is 4% compounded annually, which would you prefer?

c) At what annual interest rate would you be indifferent between the two?

(Hint: build a spreadsheet to compute the present value of each of the $1 million payments.)