2. Yuma, Arizona resident Rosalind Setchfield won $1.3 million in an Arizona lottery drawing, to be paid in 20 installments of $65,277. However, her husband, a construction worker, suffered serious injuries when a crane dropped a heavy beam on him. The couples medical expenses and debt mounted. Six years later, in early 2015, a prize broker from Singer Asset Financing Company telephoned Mrs. Setchfield with a promising offer. Singer would immediately give her $140,000 for one-half of each of her next nine prize checks (1/2 * 9 * $65,277 = $293,746), an amount close to 48% of the $293,746, she had coming over that period. A big lump sum had obvious appeal to Mrs. Setchfield at that time, and she ended up signing a contract with Singer. Did she make the right decision? The following table gives the details. (Beginning of the year)

Year	Installment	Proposal
2008	$65,277	$65,277
2009	$65,277	$65,277
2010	$65,277	$65,277
2011	$65,277	$65,277
2012	$65,277	$65,277
2013	$65,277	$65,277
2014	$65,277	$65,277
2015	$65,277	$32,638.50
2016	$65,277	$32,638.50
2017	$65,277	$32,638.50
2018	$65,277	$32,638.50
2019	$65,277	$32,638.50
2020	$65,277	$32,638.50
2021	$65,277	$32,638.50
2022	$65,277	$32,638.50
2023	$65,277	$32,638.50
2024	$65,277	$65,277
2025	$65,277	$65,277
2026	$65,277	$65,277
2027	$65,277	$65,277

3. Suppose you have a choice of investing in one of the following: a. A zero-coupon bond, which costs $513.60, today, pays nothing during its life, and then pays $1,000 after 5 years. b. A bond that costs $1,000 today, pays $113 in interest semiannually, and matures at the end of five years with a par value of $1,000 to be repaid. Which bond would provide the higher yield? 4. Consider a five-year MACRS asset purchased at $80,000 (HINT: 5 year MACRS depreciated in six years with half year convention). The applicable salvage value would be $40,000 in year 3, $30,000 in year 5, and $10,000 in year 6. Create depreciation cash flow if the asset is disposed of in a. Year 3, b, Year 5 and c. Year 6. 5. PizzaPizza is considering two college towns, Collegeville and University City, to open their new store this August, just in time for the fall semester. The Collegeville location requires an initial investment of $126,000, whereas the University City location requires $185,000. From the student population and the competition, the finance team estimates the revenue at Collegeville to be $48,000 a year and the revenue at University City to be $56,000. Assuming a hurdle rate of 15%, how long it will take to get the investment back for each location? Include the time value of money in your analysis.