please answer question 2 of problem 1

FT T OE Ordnery Problem 1 You won the state lottery on January 1, 2018. You can elect to receive (a) $1,000,000 at the end of 2019 or i Y $150,000 per year for 10 years with the first payment at the end of 2019. The interest rate is expected to be 6% for 2018 and 7% from 2019 to 2023 and 8% from 2024 onwards. How much is each option worth in present value dollars? Diferent interest rate 1. How much is option (a) worth in present value dollars? (10 points) Pin-1, -7%) x PV(n=1, r=6%) x 1,000,000 -881,683 Multiply Pu facter of gener 2018 8 2019 tinces the single (-93458) (99340) = .globag (1600.000) = 881, 18= 2. How much is option (b) worth in present value dollars? (10 points) S60 219.3 x PV(n=1, r=6%) PVOA(n-5, -7%) x 150,000 x PV(n-1, 6%) + PVOA(n5, -8%) x 150,000 x P 5, 794) PV[n-1, r=6%) = 983,065 (1.071,40 1.00 6% 782 19 20 21 22 23 24 25 26 27 28 7% -8% (n=5,8%) 4. 20020 3.99 271 nas 6.94340 PV = 615,030 Pu= 898,966.5