Kate just won the lottery and must choose between three award options:

1.	A lump sum of $5,000,000 received today
2.	15 end-of-year payments of $625,000
3.	40 end-of-year payments of $450,000

For each option in the table, indicate which values to enter for each variable in your financial calculator.

	Option 1		Option 2		Option 3
Lump Sum Payment	15 Payments	40 Payments
No. of Periods			N =		=
Annual payment			PMT =		=
Future Value			FV= 0		FV = 0
Present Value	$5,000,000		?		?

Assume the interest rate is 8.00%, entered as 8 on your financial calculator.

Note: Take the absolute value of the present value when answering this question.

Using the table you just filled out, along with a financial calculator, yields a present value for option 2 of approximately and a present value for option 3 of approximately (when the interest rate is 8.00%). Based on this, Kate should choose option if she seeks to maximize present value.

Now assume the interest rate is 9.00%, entered as 9 on your financial calculator.

Note: Take the absolute value of the present value when answering this question.

Using the table you just filled out, along with your financial calculator, yields a present value for option 2 of approximately and a present value for option 3 of approximately (when the interest rate is 9.00%). Based on this, Kate should choose option if she seeks to maximize present value.

Assume the interest rate is 10.00%, entered as 10 on your financial calculator.

Note: Take the absolute value of the present value when answering this question.

Using the table you just filled out, along with your financial calculator, yields a present value for option 2 of approximately and a present value for option 3 of approximately (when the interest rate is 10.00%). Based on this, Kate should choose option if she seeks to maximize present value.

As the interest rate increases, option 1 becomes attractive.