1.1 Gary, Charles and Ron decide to split an award equally.

Gary chooses to receive $3000 in one year (at the end of first year).

Charles is considering receiving the award as a lump sum at the end of year 5.

Ned prefers to receive the award as a 5-year annuity with monthly payments, starting next month (at the end of first month).

Assume that all three persons require the same rate of return.

The annual real interest rate is 4% and annual expected inflation rate is 2%.

For Gary, what is the present value of his award (or value at t=0)?

1.2 In order to receive the same value as Gary, how much should Charles receive at the end of year 5?

1.3 In order to receive the same value as Gary, how much cash flow or payment should Ron receive each year for 5 years / 60 months?