1. You're trying to save to buy a new $220,000 Ferrari. You have $39,000 today that can be invested at your bank. The bank pays 6.0 percent annual interest on its accounts. How long will it be before you have enough to buy the car?
2. You have won the lottery and you have the choice of taking your prize in one of three ways. First, you can choose to receive a single payment of $1,500,000 immediately. Second, you can choose to be paid $225,000 a year for 20 years. If select the third alternative, you will be entitled to the amount of $2,500,000 after 10 years. If your discount rate is 12%,
What is the value of Option 1?