Q4. You have just received notification that you have won the $2.5 million first prize in the

Georgia Lottery. However, the prize will be awarded on your 60th birthday, 45 years from

now. The appropriate interest rate is 5 percent. What is the present value of your

winnings?

Q5. You are depositing $3,000 in a retirement account today and expect to earn an

average return of 4.5 percent on this money. How much additional income will you earn if

you leave the money invested for 35 years instead of just 30 years?

(Hint: Use Future value formula)

Q6. What is the future value of $15,000 a year for 27 years at 7 percent interest?

(Hint: Find future value of annuity-multiple payments)