1.What is the difference in present value between a perpetuity that pays $8,500 per year and an ordinary annuity that pays $8,500 per year for 26 years? Assume a discount rate of 10%.

2. An ordinary annuity has a present value of $21,000. What would be the present value if the first payment were not received until the end of year 12? Assume a cost of capital of 9%.

3.You just won the lottery and will receive $7,000,000 paid to you in 20 equal annual payments with the first payment being received at the end of this year. If the discount rate is 6%, what is the present value of the prize?