payl count balance be after 1 year? G 5 E5-2 If Bob and Judy combine their savings of $1,260 and $975, respectively, and deposit this amount into an account that pays 2% annual interest, compounded monthly, what will the account balance be after 4 years? G 3 E5-3 Gabrielle just won $2.5 million in the state lottery. She is given the option of receiv- ing a total of $1.3 million now, or she can elect to be paid $100,000 at the end of each of the next 25 years. If Gabrielle can earn 5% annually on her investments, from a strict economic point of view which option should she take? CHAPTER 5 Time Value of Money 249 LG 4 E5-4 Your firm has the option of making an investment in new software that will cost $130,000 today and is estimated to provide the savings shown in the following table over its 5-year life. Year Savings estimate $35,000 N - 50,000 3 45,000 4 25,000 15,000 Should the firm make this investment if it requires a minimum annual return of 9% on all investments