If you won the lottery today and were told your prize was $1 million to be paid at the rate of $100,000 per year for ten years, what would be the present value of your prize if the discount rate were 10%?
(a) Assume the payments come at the beginning of each year;
(b) Assume that the payments come at the end of each year
What is the present value of a 10-year annuity of $10,000 per period in which the payments are received at the beginning of each period? The interest rate is 10%.