Question

PROBLEM 4 Assume that you just won $35 million in the Florida lottery, and hence the state will pay you 20 annual payments of $1.75 million each beginning immediately. If the rate of return on securities of similar risk to the lottery earnings (e.g., the rate on 20-year U.S. Treasury bonds) is 6 percent, what is the present value of your winnings? PROBLEM 5 Epitome Healthcare has just borrowed $1,000,000 on a five-year, annual payment term loan at a 15 percent rate. The first payment is due one year from now. Construct the amortization schedule for this loan Page 1 of 1 315 words Focus MacBook esc LOBIŲ 12 Š W W tab

Answer 1

Problem 4 Winning Amount=$35 Million Annual Initial Installment Amount=$ 1.75 Million Present value of Winning-Initial Installment +Inatallment *PVIFA(n=19,i=6) = 1.75+1.75*(11.158) 21.28 Problem NO.5 Statement of Amortisation Schedule Principal Interest Intallment Year Loan Amount (1) (2) (3) (4) 1 0/S Loan Amount (4)-(3) (1)*15% (1)-(2) 1000000.00 148330.00 150000.00 298330.00 851670.00 851670.00 170579.50 127750.50 298330.00 681090.50 681090.50 196166.43 102163.58 298330.00 484924.08 484924.08 225591.39 72738.61 298330.00 259332.69 259333.00 259333.00 38899.95 298330.00 0.00 | ол | Д | Ш | Installment =1000000/3.352 = 298329.36