1. You've won a lottery that pays you $2,000,000 today. If you invest the $2,000,000 today in an investment account that earns 4% APR (compounded monthly), how much can you withdraw each month, starting in 6 months (the same amount each month) for 360 months?
$9,709
$5,556
$5,649
$9,548
No correct answer is given
2. You need a copy machine for your office. You can buy your own machine for $15,000 today and pay $200 per month (starting next month) for 60 months for maintenance OR you can lease a copy machine for $450 per month (starting next month) for 60 months and have no maintenance costs. If your investments earn 4% APR (compounded monthly), which alternative is cheaper in present value terms and by how much?
Leasing is cheaper by $2,825
No correct answer is given
Buying your own is cheaper by $1,425
Leasing is cheaper in PV terms by $1,425
Buying your own is cheaper by $2,825