Issue #1

Over the weekend I won the $1,000,000 Illinois "Final Four" lottery. I visited the Lottery office this

morning and they informed me the million dollars is to be paid $50,000 per year for 20 years. I really

want my money "now" since I am afraid the State of Illinois might need to file bankruptcy. The lottery

office spokesperson informed me I could have the money "now" but she needed to use a money factor

of 5%. In passing, she also indicated that she misses the good old days of Blago. I am starting to think

she might cheat me.

Question:

What should I expect in a "lump sum" payment before taxes if I get paid "now"?

Issue #2:

My granddaughter, who is in kindergarten, informed my wife her favorite class is "recess". My wife has

concluded she probably will not be receiving an academic scholarship for recess, thus she wants to save

money for her college education. Her financial planner suggested she use a money factor of 5%.

What does my wife need to invest

today

so she has $50,000 available for college in 15 years?

What would she need to

invest each year

, if she wants an alternative, to a lump sum initial deposit.