In October 2007, the Los Angeles Times newspaper reported that the winner of a national lottery prize in California had the misfortune to be both bankrupt and in prison for fraud. The lottery prize was $9,420,713, and was to be paid to the winner in 19 equal annual instalments (not adjusted for the time value of money) commencing 1 year from today. The Bankruptcy Court judge ruled that the prize should be sold off to the highest bidder and the proceeds used to pay off the creditors of the now unfortunate prison inmate. Required: a) If the interest rate on a similar risk-free security were 8% p.a., how much would you have been prepared to bid for the prize? b) The Providence Insurance Company was reported to have offered to pay $4.2 million for the prize today. Calculate the approximate return that this company was looking for. Briefly comment on why your answer to section b) is reasonable based on your knowledge of the relationship that exists in finance between price and yield. d) If Providence Insurance wanted to pay the sum specified ($4.2 million) in 3 equal annual payments commencing today, what amount would you advise the recipient of the payments to accept if they are happy with the yield calculated in section c)? It is assumed that the equal annual payments calculated for this part of the question are adjusted for the time value of money