Question 8: Kristina just won the lottery, and she must choose among three award options. She can elect to receive a lump sum of $62 million, to receive 10-end-of-year payments of S9.5 million, or to receive 30- begining-of-year payments of S5.6 million. a. If she thinks she can earn 7.5% annually, which should she choose? b. If she thinks she can earn 8.5% annually, which should she choose? c. If she thinks she can earn 9.5% annually, which should she choose? d. Explain how interest rates influence her choice Question 9: Allison and Leslie, who are twins, just received S10,000 each for the 25th birthday. The both aspire to become millionaires. Each plans to make a $5,000 annual contribution to her "early retirement fund" on her birthday, beginning a year from today. Allison opened an account with the Safety-First Bond Fund, a mutual fund that invests in investment-grade (AAA rated) bonds whose investors have earned 6% per year in the past. Leslie invested in the New Issue Bio-Tech Fund, which invests in small, newly issued bio-tech stocks and whose investors have earned an average 10.8% per year in the fund's relatively short If the tow women's funds earn the same returns in the future as in the past, how old will each be when she becomes a millionaire? How large would Allison's annual contributions have to be for her to become a millionaire at the same age as Leslie, assuming their expected returns are realized? Is it rational or irrational for Allison to invest in the bond fund rather than in stocks? a. b. c. Question 10: A father is now planning a savings program to put his daughter through college. She is 13, plans to enroll at the university in 5 years, and should graduate in 4 years. Currently, the annual cost (for everything: food, clothing, tuition, transportation, books, etc.) is $12,000, but these costs are expected to increase by 2.5% annually. The college requires total payment at the beginning of the year. She now has $10.000 in a college savings account that pays 9% annually. Her father will make six equal annual deposits into her account; the 1st deposit today, and the 6th on the day she starts college. How large must each of the SIX payments be