You won the state lottery on January 1, 2018. You can elect to receive (a) $1,000,000 at the end of 2019 or (b) $150,000 per year for 10 years with the first payment at the end of 2019. The interest rate is expected to be 6% for 2018 and 7% from 2019 to 2023 and 8% from 2024 onwards. How much is each option worth in present value dollars? Explain the steps.

1. How much is option (a) worth in present value dollars?
2. How much is option (b) worth in present value dollars?