The winner of a lottery is given three choices for the the payments:
(a) $900,000 now;
(b) Payments of $100,000 per year for the next twelve years, starting now;
(c) Payments of $101,000 per year for twelve years, beginning in one years' time.
Determine which is the better option if the interest rate is 5% per annum.
(d) a new qusetion
How much money is needed to establish a scholarship fund paying $60,000 annually (forever) if the fund will earn interest at 6% p.a. and if the first payment is made after one year?