Alex Meir recently won a lottery and has the option of receiving
one of the following three prizes: (1) $64,000 cash immediately,
(2) $21,000 cash immediately and a sixperiod annuity of $7,700
beginning one year from today, or (3) a sixperiod annuity of
$13,300 beginning one year from today.
1. Assuming an interest rate of 7%, determine
the present value for the above options. Which option should Alex
choose?
2. The Weimer Corporation wants to accumulate a
sum of money to repay certain debts due on December 31, 2027.
Weimer will make annual deposits of $115,000 into a special bank
account at the end of each of 10 years beginning December 31, 2018.
Assuming that the bank account pays 8% interest compounded
annually, what will be the fund balance after the last payment is
made on December 31, 2027?
Assuming an interest rate of 7%, determine the present value for
the above options. Which option should Alex choose? (Round your
final answers to nearest whole dollar amount.)



Annuity Payment 
PV Annuity 

Immediate Cash 

PV Option 
Option 1 


+ 

= 
$0 
Option 2 


+ 

= 
$0 
Option 3 


+ 

= 
$0 
Which option should Alex
choose? 









Table or calculator function: 

Payment: 

n =


i =


Future value: 

