10. Time Value of Money

You have won the lottery! You are given two options for your payout:

1. You can receive \$540,000 today

2. You can receive \$50,000 annually each year for the next twenty years

Assuming the interest rate is 6%, which is the better option?

ABC Company issues 1,000 bonds with a face value of \$1,000 maturing in eight years. The bonds pay 8% interest semi-annually and the current market rate of interest is 12%. What is the total amount of cash received from the bond issuance?