Now its time for you to practice what youve learned.

Suppose that Larry just won the lottery and must choose between three award options:

1.	A lump sum of $35,000,000 received today
2.	15 end-of-year payments of $4,375,000
3.	40 end-of-year payments of $3,150,000

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 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, Larry should choose option if he 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 and 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 9.00%). Based on this, Larry should choose option if he 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 and 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 10.00%). Based on this, Larry should choose option if he seeks to maximize present value.

As the interest rate increases, options 2 and 3 become attractive, relative to option 1.