Question $5$

A family will need to make an $$50$ thousand payment for college tuition in $10$ years for their

first child. How much will they need to invest today to make this payment, if they can earn $6\%$

per year on the investment?

Question $6$

One of your clients is about to retire, and has two choices for his retirement plan payouts. He

can elect to receive a $19$ year annuity of $16$ thousand per year starting at the end of this year,

or a lump sum of $297$ thousand payable immediately. If the client's required return is $9\%,$ how

much more valuable is the lump sum compared to the annuity?

Note the result can be a negative number!