1. Jose was injured in an accident, and the insurance company has offered him the choice of $24,000 per year for 15 years, with the first payment being made today, or a lump sum. If a fair return is 7.5%, how large must the lump sum be to leave him as well off financially as with the annuity? a. $248,236.26 b. $189,023.94 c. $234,571.88 d. $202,688.32 e. $227,739.69
2. What's the present value of a 4-year ordinary annuity of $2,750 per year plus an additional $2,500 at the end of Year 4 if the interest rate is 6.5%? a. $7,464.66 b. $9,952.87 c. $8,858.06 d. $12,341.56 e. $11,364.25