Assume that you have an asset paying $1000 next year and $1000 in two years, and nothing more after that. A friend offers you $1750 for this asset. If the interest rate is 7%, should you sell? Explain your reasoning. You have a three-year bond with a face value of $100, paying interest of $5 per year. If the market rate of interest is 4%, what is the price of your bond? Assume the Powerball lottery has a minimum prize of $10 million paid equally over 30 years, or $5.8 million paid immediately. At a 6% rate of interest, should you take the annuity ($333,333 annually) or the cash ($5.8 million today)? You can use the present value formula in Excel for this problem. In a cell, enter =PV(i, n, $Amount,, 1) where =PV instructs Excel to compute a present value i is the rate of interest (as a decimal) n is the number of years $Amount is the amount paid in each period Note the space between $Amount, ,1. This is not a mistake. This blank instructs Excel that there is no residual future value. The final 1 in the formula instructs Excel that the first $333,333 installment is paid immediately, and the other 29 installments are to be discounted over the next 29 years. (Note: For 4, the answer will be a negative number. Just ignore the red color and use the positive value of the answer obtained from Excel.) Which option is better (assume that you pay no taxes)? Explain..