Use liabilities (time value of money) and the present value tables to answer the following questions:

1. You just won the lotto and you have been given the option of receiving $4 million today or $1 million at the end of every year for the next five years. Assume that you can invest at 8% per year. Show calculations.
2. You just won the lotto and you have been given the option of receiving $10 million today or $1 million at the end of every year for the next 4 years and an additional bonus payment of $10 million at the end of the fourth year. Assume that you can invest at 9% per year. Show calculations.
3. What will be the periodic payment every six months on a bond with $1,000 face value and coupon rate of 8%? The bond promises semi-annual payments.
4. On January 1, 2011, ABC issues 8%, 2-year bonds with a face value of $100,000. Coupons are payable semi-annually on June 30 and December 31, and the bond will be repaid on December 31, 2012. The market rate of interest on the date of issue is 12%, compounded semi-annually. What is the issue price of the bonds on January 1, 2011? Show calculations.