Your friend has just won $30 million in the lottery. He is surprised to learn that the lottery company pays prize winnings in 10 equal annual installment, and not as single cash payment. (Assume 9% interest rates for all calculations)

1. What is the true value of his prize in this payment scheme if the payments begin immediately?

2. He has asked for your advice on how he could get paid immediately instead of having to wait 10 years. You have advised him that anyone paying him immediately would give him much less than $30 million. He is not satisfied with your answer ad asks the lottery company to pay him his full winnings immediately. The company advises him that it could only pay him in a single sum if he agreed to his payment being calculated as an ordinary annuity. What mount would he receive if he opted for this payment scheme?

3. Which payment scheme would pay the highest amount?