Q1. James Jamerson will receive $18,200 a year for the next 18 years (starting one year from today) as a result of a book he has written. If a discount rate of 11 percent is applied, should he be willing to sell out his future rights now for $160,000? Show your work and explain your answer based on present value analysis. Use the computational methods described in the lesson videos. Do not use Excel formulas.

Q2.

Pino Palladino made a $3,500 deposit in his savings account on his 20^th birthday, and he has made another $3,500 deposit on every birthday since then. His account earns 8 percent compounded annually. How much will he have in his account after he makes the deposit on his 35^th birthday? Show your work and explain your answer. Use the computational methods described in the lesson videos. Do not use Excel formulas.

Q3.

Carol Kaye won the $55 million lottery. She is given two options. She can receive $1.35 million a year for the next 17 years (starting one year from today) plus an additional lump-sum payment of $32,050,000 after 17 years. Alternatively, Carol can receive 25% of the $55 million in a lump-sum payment two years from today. Which option should Carol choose? Assume a 15% discount rate. Perform all necessary computations. Show your work and explain your answer based on present value analysis. Use the computational methods described in the lesson videos. Do not use Excel formulas.