After hearing a knock at your front door, you are surprised to see the Prize Patrol from a large, well-known magazine subscription company. It has arrived with the good news that you are the big winner, having won $29 million. You have three options.

(a)	Receive $1.45 million per year for the next 20 years.
(b)	Have $10.25 million today.
(c)	Have $2 million today and receive $1,150,000 for each of the next 20 years.

Your financial adviser tells you that it is reasonable to expect to earn 12 percent on investments. Required: 1. Calculate the present value of each option. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Enter your answers in dollars, not in millions.)

2. Determine which option you prefer.

present value of 1$future value of 1$present value of annunity future value of annunity

TABLE 11.2A Present Value of $1 0.9804 0.9612 0.9423 0.9238 0.9057 0.8880 0.8706 0.8535 0.8368 0.8203 0.6730 0.9639 0.9290 0.9592 0.9201 0.8826 0.9346 0.8734 0.9259 0.8573 0.7938 0.7350 0.9524 0.9426 0.8900 0.8396 0.7921 0.7473 2 0.9246 0.8638 0.8227 0.7835 0.7462 0.7107 0.6768 0.8885 0.8626 0.8375 0.8631 0.8548 0.8219 0.7903 0.7599 0.7307 0.7026 0.6756 0.4564 4 0.7629 0.8121 0.7790 0.7473 0.7168 0.6302 0.5835 0.5403 0.5002 0.4632 0.7728 0.7449 0.6227 0.5820 0.7894 0.6274 0.5919 0.7441 0.5537 0.6920 0.4789 0.6595 0.4350 20 0.3769 0.3118 20% 0.9009 0.8116 0.8929 0.7972 0.8696 0.7561 0.6575 0.5718 0.4972 0.4323 0.3759 0.3269 0.2843 0.2472 0.8333 0.6944 0.5787 0.4823 0.4019 0.3349 0.9091 0.8850 0.7831 0.6931 0.6133 2 0.8417 0.7695 0.7084 0.6499 0.4096 0.3277 0.2621 0.2097 0.6830 0.6355 0.6587 0.5935 0.5346 0.4817 04339 0.3909 0.3522 0.5921 0.5645 0.4803 0.4556 0.3996 0.3506 0.3075 0.2697 0.4523 0.4665 0.4241 0.3855 0.1486 0.5019 0.2326 0.1342 0.4224 0.3220 0.1037 0.2946 20 0.0261 TABLE 11.1A Future Value of $1 1.0000 1.0200 1.0404 375% 1.0000 1.0375 1.0000 1.0400 1.0816 1.0425 1.0500 1.1025 1.0609 1.0927 1.1449 3 1.1330 1.0824 1.1041 1.1262 1.1487 1.1587 1.2021 1.2472 1.2939 1.3425 1.3928 14450 2.0882 1.2625 1.3382 1.3605 1.4693 1.2313 1.2837 1.3382 1.3951 1.1593 1.2653 1.3401 1.4071 1.4775 1.5513 1.6289 2.6533 1.5007 1.6058 1.2668 1.3048 1.3439 1.3686 1.4233 1.4802 1.5036 1.5938 1.6895 1.7906 3.2071 1.8385 1.9672 3.8697 2.1589 4.6610 20 1.4859 2.2989 Periods 1.0000 1.2000 1.2500 1.5625 1.9531 2.4414 3.0518 3.8147 4.7684 5.9605 7.4506 9.3132 86.7362 1.2100 1.3310 1.4641 1.2321 1.3676 1.3225 1.5209 2 1.2769 1.4429 1.6305 1.8424 1.2996 1.2950 1.4049 1.7623 2.2107 2.7731 1.7280 2.0736 2.4883 2.9860 3.5832 4.2998 5.1598 4 1.5386 2.0114 2.3131 1.8280 1.9926 2.1719 2.3674 1.7716 1.9487 2.1436 2.3579 2.5937 6.7275 2.1950 2.5023 2.8526 3.2519 3.7072 13.7435 2.3526 2.6584 2.0762 2.3045 2.5580 2.8394 8.0623 3.0590 3.5179 4.0456 16.3665 3.1058 3.3946 11.5231 20 38.3376 TABLE 11.4A Present Value of Annuity of $1 0.9709 2.8286 4.5797 6.2303 375% 0.9639 2.7883 0.9524 1.8594 2.7232 0.9259 1.7833 2.5771 3.3121 3.9927 0.9592 1.8794 2.7620 0.9804 2.6730 3.4651 4.2124 4.9173 5.5824 6.2098 6.8017 7.3601 11.4699 0.9346 1.8080 2.6243 3.3872 4.1002 4.7665 5.3893 5.9713 2.8839 3.8077 2.7751 4.4207 5.1997 5.9470 6.6638 7.3513 8.0109 13.2944 5.6014 6.4720 7.3255 5.2851 6.0579 6.8028 7.5208 6.0021 6.7327 7.4353 4.3295 5.0757 5.7864 7.0197 5.7466 6.2469 7.1078 .0236 10.5940 8.9826 8.5302 14.8775 13.5903 12.4622 9.8181 0.8550 1.6681 2.3612 2.9745 3.5172 3.9975 4.4226 4.7988 0.8772 1.6467 2.3216 0.9174 0.9091 1.7355 2.4869 3.1699 3.7908 4.3553 0.8929 0.8333 1.5278 2.5887 3.3255 3.8372 4.1925 2.5313 3.2397 3.8897 2.4437 3.1024 3.6959 4.2305 4.7122 5.1461 5.5370 5.8892 7.9633 2.4018 3.0373 3.6048 2.2832 2.8550 3.3522 3.7845 3.4331 3.8887 4.2883 4.6389 4.9464 5.2161 6.6231 2.6893 4.5638 5.0330 5.5348 5.3349 5.7590 5.3282 5.6502 7.4694 5.4262 7.0248 4.7716 5.0188 6.2593 3.5705 3.9539 20 9.1285 4.8696 There is one payment each period 560859397 169866 159532 11123 9197 997308 571 024716298 1234578013 1235792605 7 2 5 7 3475 873 2 7 - 12346813602 1234568913 611558339 0135 149657203 1234568912 - 12346803691 3 8 75994 9 7449 1234567902 1 1234680258 653 2 4 7774 582 2 2 1. 2 3 4 5 6 7 9 0 29 1-1. 2 3 4 6802472 734 4 7 0123581480 1 97817 1 1234679146 1234567901 0162954 7577 9567 9 8148 3937 1361744592 - 12346791357 1234567801 2 8 8 7 259520011 2 12345678904 12345791351 1115 1234567890 12345678900 e