Homework Answers
We will choose the prize which has the highest net present value
NPV of A = 40000
NPV of B = amount(1)/1+r + amount(2)/(1+r)2 + amount(3)/(1+r)3
= 15000 / 1+0.04 + 15000 / (1+0.04)2 + 15000 / (1+0.04)3
41626.36
Since the net present value of B is higher, Prize B will bepreferred
Add Answer to:
Question A1 [1. You win a prize in the lottery and you are offered to take...
PLEASE help with question 17 and 18... 17-if you win the lottery, and the prize is...
PLEASE help with question 17 and 18...
17-if you win the lottery, and the prize is $50,000 a year for the next 15 years, what lump sum amount would you accept today, assuming 5% interest? 18-you deposit $8000 into a bank account today and earn 6% interest for 5 years, compounded semi annually. What will you have at the end?
The Powerball Lottery prize this week is at $590,500,000. The odds are 1 in 175,223,510 that...
The Powerball Lottery prize this week is at $590,500,000. The odds are 1 in 175,223,510 that you will win. Winners have two choices in how they receive their winnings: (1) one lump sum of $370,896,781, or (2) 30 annual payments of $19,683,333. If you win the lottery, should you take the annuity or the cash? (To help with your decision: 3.59% is the discount rate that makes the present value of the annuity due-30 annual payments-equal to the one lump...
Suppose you have just won a $5 million lottery today. When you win the lottery, you...
Suppose you have just won a $5 million lottery today. When you win the lottery, you generally receive payments of the lottery jackpot over twenty years. Therefore, your $5 million lottery winnings consist of twenty annual payments of $250,000 each. But wait! Don’t forget about the taxes. The IRS will take 25 percent of each check, so you are left with $187,500 each year. Assume that the annual interest rate is 3%. So, if someone offered you a lump-sum of...
Suppose you have just won a $5 million lottery today. When you win the lottery, you...
Suppose you have just won a $5 million lottery today. When you win the lottery, you generally receive payments of the lottery jackpot over twenty years. Therefore, your $5 million lottery winnings consist of twenty annual payments of $250,000 each. But wait! Don’t forget about the taxes. The IRS will take 25 percent of each check, so you are left with $187,500 each year. Assume that the annual interest rate is 3%. So, if someone offered you a lump-sum of...
need help has government attempted to manage this relationship? 15 2. You win a lottery and...
need help
has government attempted to manage this relationship? 15 2. You win a lottery and are offered a one time lump sum payment of $650,000 (NOW) or five (5) payments of $200,000 - one per year. What is the lottery payment plan implied rate of time preference (approximation is ok)? If you decide to take the lump sum, is your time higher or lower than the lottery payment plan's time preference? How would your expectations of future inflation/deflation effect...
On January 1, you win $50,000,000 in the state lottery. The $50,000,000 prize will be paid...
On January 1, you win $50,000,000 in the state lottery. The $50,000,000 prize will be paid in equal installments of $6,250,000 over eight years. The payments will be made on December 31 of each year, beginning on December 31 of this year. The current interest rate is 5.5%. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below. EXCEL SHEET: Present value of an...
On January 1, 2016, you win $50,000,000 in the state lottery. The $50,000,000 prize will be...
On January 1, 2016, you win $50,000,000 in the state lottery. The $50,000,000 prize will be paid in equal installments of $6,250,000 over eight years. The payments will be made on December 31 of each year, beginning on December 31, 2016. If the current interest rate is 5%, determine the present value of your winnings. Use Table 2. Round to the nearest whole dollar.
On January 1, you win $3,760,000 in the state lottery. The $3,760,000 prize will be paid...
On January 1, you win $3,760,000 in the state lottery. The $3,760,000 prize will be paid in equal installments of $470,000 over 8 years. The payments will be made on December 31 of each year, beginning on December 31. If the current interest rate is 5%, determine the present value of your winnings. Use the present value tables in Exhibit 7. Round to the nearest whole dollar.
On January 1 you win $50,000,000 in the state lottery. The $50,000,000 prize will be paid...
On January 1 you win $50,000,000 in the state lottery. The $50,000,000 prize will be paid in equal installments of $6,250,000 over eight years. The payments will be made on December 31 of each year, beginning on December 31 of this year. If the current interest rate is 5%, determine the present value of your winnings. Use the present value tables in Exhibit 7. Round to the nearest whole dollar. Exhibit 7: 8 periods at 6.46321
Congratulations! You have just won the State Lottery. The lottery prize was advertised as an annualized $105 million pai...
Congratulations! You have just won the State Lottery. The lottery prize was advertised as an annualized $105 million paid out in 30 equal annual payments beginning immediately. The annual payment is determined by dividing the advertised prize by the number of payments. Instead you could take a one lump cash prize of the present value of all the annuity payments using a 4.5% discount rate. You now have up to 60 days to determine whether to take the cash prize...
PLEASE help with question 17 and 18...
17-if you win the lottery, and the prize is $50,000 a year for the next 15 years, what lump sum amount would you accept today, assuming 5% interest? 18-you deposit $8000 into a bank account today and earn 6% interest for 5 years, compounded semi annually. What will you have at the end?
need help
has government attempted to manage this relationship? 15 2. You win a lottery and are offered a one time lump sum payment of $650,000 (NOW) or five (5) payments of $200,000 - one per year. What is the lottery payment plan implied rate of time preference (approximation is ok)? If you decide to take the lump sum, is your time higher or lower than the lottery payment plan's time preference? How would your expectations of future inflation/deflation effect...
Most questions answered within 3 hours.
-
could someone please post clear drawings of the three structures
in the equilibrium mixture of D-glucose...
asked 1 minute ago -
Using the Properties of Order show that 5n5 +
4n4 + 6n3 + 2n2+ n +...
asked 5 minutes ago -
What is experiential learning and how is it helpful for teaching
leadership, and interpreting group dynamics?...
asked 4 minutes ago -
A security awareness policy defines the responsibilities of
managers and information owners.
True
False
asked 6 minutes ago -
which is the equilibrium expression for the reaction
3A(g)+4B(g)<---> 2C(g)+5D(g)
asked 7 minutes ago -
Create a balanced compensation plan that you feel would
encourage a restaurant manager to be more...
asked 14 minutes ago -
Re: Human Physiology
Comment on the differences between representing V02 max as an
absolute number and...
asked 17 minutes ago -
A firm with a WACC of 10% is considering the following mutually
exclusive projects:
0
1...
asked 21 minutes ago -
. A 100.0 mL sample of 0.18 M HClO4 is titrated with 0.27 M
LiOH. Determine...
asked 44 minutes ago -
A regression equation that describes the relationship between
the amount of the bill ($) at a...
asked 1 hour ago -
exercise on VSEPR and molecular structrue.
octahedral
SeCl62-
TeCl62-
ClF62-
distorted
SeF62–
IF6–
asked 2 hours ago -
284 mL of a 0.52 M potassium hydroxide solution is added to 467
mL of a...
asked 2 hours ago