(1)
Option A:-
Amount Received * PV Annuity Factor (13%,20 years)
$1200000 * 7.02475 = $8429700
Option B:-
Received Today = $9000000
Option C:-
Received Today + Amount received for 20 years * PV Annuity Factor (13%,20 years)
$3000000 + ($900000 * 7.02475)
= $9322275
(2) Option C is preferable
E11-6 Comparing Options Using Present Value Concepts [LO 11-S1] After hearing a knock at your front...
After hearing a knock at your front door, you are surprised to see the Prize Patrol from a large, well-known magazine subscription company. It has arrived with the good news that you are the big winner, having won $23 million. You have three options. (a) Receive $1.15 million per year for the next 20 years. (b) Have $8.75 million today. (c) Have $2.75 million today and receive $850,000 for each of the next 20 years. Your financial adviser tells you...
After hearing a knock at your front door, you are surprised to see the Prize Patrol from a large, well-known magazine subscription company. It has arrived with the good news that you are the big winner, having won $31 million. You have three options. (a) Receive $1.55 million per year for the next 20 years. (b) Have $10.75 million today. (c) Have $2.5 million today and receive $1,250,000 for each of the next 20 years. Your financial adviser tells you...
After hearing a knock at your front door, you are surprised to see the Prize Patrol from a large, well-known magazine subscription company. It has arrived with the good news that you are the big winner, having won $22 million. You have three options. (a) Receive $1.1 million per year for the next 20 years. (b) Have $8.5 million today. (0) Have $2.5 million today and receive $800,000 for each of the next 20 years. Your financial adviser tells you...
8. value: 0.25 points After hearing a knock at your front door, you are surprised to see the Prize Patrol from a large, well-known magazine subscription company. It has arrived with the good news that you are the big winner, having won $20 million. You have three options: (a) Receive $1 million per year for the next 20 years. (b) Have $8 million today. (c) Have $2 million today and receive $700,000 for each of the next 20 years, Your...
After hearing a knock at your front door, you are surprised to see the Prize Patrol from a large, well-known magazine subscription company. It has arrived with the good news that you are the big winner, having won $27 million. You have three options. (a) Receive $1.35 million per year for the next 20 years. (b) Have $9.75 million today. I Have $3.75 million today and receive $1,050,000 for each of the next 20 years. Your financial adviser tells you...
After hearing a knock at your front door, you are surprised to see the Prize Patrol from a large, well-known magazine subscription company. It has arrived with the good news that you are the big winner, having won $27 million. You have three options. (a) Receive $1.35 million per year for the next 20 years. (b) Have $9.75 million today. I Have $3.75 million today and receive $1,050,000 for each of the next 20 (c) years. Your financial adviser tells...
After hearing a knock at your front the good news that you are the big winner, having won $31 million. You have three options. door r, you are surprised to see the Prize Patrol from a large, well-known magazine subscription company. It has arrived with (a) Receive $1.55 million per year for the next 20 years. (b) Have $10.75 million today. (c) Have $2.5 million today and receive $1,250,000 for each of the next 20 years Your financial adviser tells...
After hearing a knock at your front door, you are surprised to see the Prize Patrol from a large, well-known magazine subscription company. It has arrived with the good news that you are the big winner, having won $38 million. You have three options. (a) Receive $1.9 million per year for the next 20 years. (b) Have $12.5 million today. (c) Have $2.5 million today and receive $1,600,000 for each of the next 20 years. Your financial adviser tells you...
After hearing a knock at your front door, you are surprised to see the Prize Patrol from a large, well-known magazine subscription company. It has arrived with the good news that you are the big winner, having won $36 million. You have three options. (a) Receive $1.8 million per year for the next 20 years. (b) Have $12 million today. (c) Have $2 million today and receive $1,500,000 for each of the next 20 years. Your financial adviser tells you...
After hearing a knock at your front door, you are surprised to see the Prize Patrol from a large, well-known magazine subscription company. It has arrived with the good news that you are the big with won $33 milion. You have three options (a) Receive $1.65 million per year for the next 20 years. (0) Have $11.25 million today (c) Have $3 million today and receive $1,350,000 for each of the next 20 years. Your financial adviser tells you that...