Practice: You have won the lottery! You are given two options for your payout:

1. You can receive $540,000 today

2. You can receive $50,000 annually each year for the next twenty years

Assuming the interest rate is 6%, which is the better option?

Concept #1: Time Value of Money Tables: Equations

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Concept #2: Time Value of Money Table: Present Value of Lump-Sum

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Concept #3: Time Value of Money Table: Present Value of Annuity

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Example #1: Using Time Value of Money Tables

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Practice: You have won the lottery! You are given two options for your payout:

1. You can receive $540,000 today

2. You can receive $50,000 annually each year for the next twenty years

Assuming the interest rate is 6%, which is the better option?

Concept #4: Time Value of Money Tables: Bonds Payable

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Example #2: TVM Tables and Bonds Payable

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Practice: ABC Company issues 1,000 bonds with a face value of $1,000 maturing in eight years. The bonds pay 8% interest semi-annually and the current market rate of interest is 12%. What is the total amount of cash received from the bond issuance?

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