1. You win the lottery, and the NY Lottery says that the total prize is $5,400,000 but thats $270,000 per year (starting immediately) for 20 years. You have the option of receiving a lump sum payment today of $3,650,000. If you use a discount rate of 4.4%, how much will you gain by making the correct choice?

2. You can afford a monthly payment for a new car of $725. The bank will offer you a loan for 5 years, with monthly payments, at an APR of 4.8%. Given these facts, what is the maximum amount you can afford to pay for a new car?

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Solving for: Type of cash flow: Formula to use: Solution