Q1) Caldwell Herald newspaper reported the following story:
Frank Ormsby of Caldwell is states newest millionaire. By selecting six winning numbers on last weeks state lottery, Mr. Ormsby has won weeks grand prize totaling $1.6 million. State Lottery Commission has pointed out that Mr. Ormsby will get his prize in 20 annual installments of $80,000 each.
a. If Mr. Ormsby can invest money at a 12% rate of return, compute the present value of his winnings?
b. Is it right to say that Mr. Ormsby is state newest millionaire? Describe your answer.