You enter to play the lottery. To your surprise, you've won! You are given the option to accept either a lump-sum payment of $105 million today or annual lifetime payments of $3,582,000 beginning today. Assuming current rates of interest are at 3.25% which is the better decision. Be sure to discuss all the aspects and assumptions in making your decision and any calculations you have made to support that decision. How old would you have to live to be indifferent between the two choices?

Also, assuming you make $70,000 a year and want to replace 80% of your income in the case of your untimely death, given your current age and the expectation that you will need to cover your family for the loss of income until you retire at 70, how much life insurance do you need to do so? (Hint: consider the need to be the potential that you would die tomorrow and your policy would need to pay out $70,000 each year until you were to be 70.) Be sure to identify the method of calculation in your discussion and use a risk-free rate of investment of 3.25%.