Lottery.

Your dreams of becoming rich have just come true. You have won the State of Tranquility's Lottery. The State offers you two payment plans for the

$4,000,000

advertised jackpot. You can take annual payments of

$100,000

at the end of the year for the next

40

years or

$824,378

today. a.If your investment rate over the next

40

years is

14%,

which payoff will you choose?b. If your investment rate over the next

40

years is

11%,

which payoff will you choose?c. At what investment rate will the annuity stream of

$100,000

be the same as the lump-sum payment of

$824,378?

a.If your investment rate over the next

40

years is

14%,

what is the present value of the

$100,000

annual payments today?