Congratulations! You have won a state lottery. The state lottery offers you the following (after-tax) payout...
Congratulations! You have won a state lottery. The state lottery offers you the following (after-tax) payout options:
Option #1: $15,000,000 after five years.
Option #2: $2,150,000 per year for five years.
Option #3: $13,000,000 after three years.
Assuming you earn 8% on your funds, which option would you prefer?
Requirements:
Find PV of each option, and determine which is the best option.
Homework Answers
Add Answer to:
Congratulations! You have won a state lottery. The state
lottery offers you the following (after-tax) payout...
Congratulations! You've won a state lotto! The state lottery offers you the following (after-tax) payout options:...
Congratulations! You've won a state lotto! The state lottery offers you the following (after-tax) payout options: (Click the icon to view the payout options.) (Click the icon to view the present value factor table.) (Click the icon to view the present value annuity factor table.) (Click the icon to view the future value factor table.) 5 (Click the icon to view the future value annuity factor table.) Requirement Assuming that you can earn 8% on your funds, which option would...
What are the present values for the 3 options of payouts?? Congratulations! You have won a...
What are the present values for the 3 options of
payouts??
Congratulations! You have won a state lottery. The state lottery offers you the following (after-tax) payout options: BE: (Click the icon to view the payout options.) (Click the icon to view Present Value of $1 table.) (Click the icon to view Future Value of $1 table. (Click the icon to view Present Value of Ordinary Annuity of $1 table.) (Click the icon to view Future Value of Ordinary Annuity...
This must be done on excel using formulas. I understand option 1 however for option 2...
This must be done on excel using formulas. I understand option 1
however for option 2 and 3 I don't know how to get the PV factor
percentage in order for me to complete the problem.
E26-23 Using the time value of money Congratulations! You have won a state lottery. The state lottery offers you the follow- ing (after-tax) payout options: Option #1: Option #2: Option #3: $12,000,000 after five years $2,150,000 per year for five years $10,000,000 after three...
Congratulations, you won a lottery of $10 million! You are offered three options to receive your...
Congratulations, you won a lottery of $10 million! You are offered three options to receive your windfall: A) A lump sum of $10 million received immediately B) An annual payment of $500,000 for 30 years C) A monthly payment of $50,000 for 30 years a. If the discount rate is 7%, which option would you choose? Show your work. b. Calculate the effective annual rate for option C.
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...
You just won the El Chapo Lottery and now you have a choice of payout plans...
You just won the El Chapo Lottery and now you have a choice of payout plans PAYOUT 1: You may elect to receive a lump sum of $5,000 kwenty-five years from today. PAYOUT 2: You can take $2,000 today PAYOUT 3: You may choose to receive 10 annual payments of $500 with the first payment given to you four years from today You have no immediate need for the money, so will put any and all cash flows that you...
2. Kelsey just won the lottery, and she must choose among three award options .She can...
2. Kelsey just won the lottery, and she must choose among three award options .She can elect to receive a lump sum today of $62 million, to receive end-of-month payments of $0.8 million for 10 years or to receive end-of month payments of $0.47 million for 30 years. If she can earn 8% annually (i.e., the discount rate is 8% per year), which is the best choice based on the PV of the three award options? a) PV of 1st...
You have just won the lottery and you can choose between the following payout options. The...
You have just won the lottery and you can choose between the following payout options. The annual interest rate (EAR) is 10%. a) $100,000 right now and $60,000 every two years starting 3 years from now and ending 17 years from now (i.e., payments are at t = 0, t = 3, t = 5, … , t = 15, t = 17). b) $60,000 a year for 25 years with the first payment one year from today (i.e., payments...
Congratulations! You have won the lottery! You are offered a choice of $1,000,000 up front or...
Congratulations! You have won the lottery! You are offered a choice of $1,000,000 up front or an annuity of $100,000 per year for 20 years. Your personal discount rate is 0.04. If you are an economically rational actor, you should:
You and 11 coworkers just won $5 million ($416,666.67 each) from the state lottery. Assuming you...
You and 11 coworkers just won $5 million ($416,666.67 each) from the state lottery. Assuming you each receive your share over 19 years and that the state lottery earns a 6 percent return on its funds, what is the present value of your prize before taxes if you request the 'up-front cash' option?
Congratulations! You've won a state lotto! The state lottery offers you the following (after-tax) payout options: (Click the icon to view the payout options.) (Click the icon to view the present value factor table.) (Click the icon to view the present value annuity factor table.) (Click the icon to view the future value factor table.) 5 (Click the icon to view the future value annuity factor table.) Requirement Assuming that you can earn 8% on your funds, which option would...
What are the present values for the 3 options of
payouts??
Congratulations! You have won a state lottery. The state lottery offers you the following (after-tax) payout options: BE: (Click the icon to view the payout options.) (Click the icon to view Present Value of $1 table.) (Click the icon to view Future Value of $1 table. (Click the icon to view Present Value of Ordinary Annuity of $1 table.) (Click the icon to view Future Value of Ordinary Annuity...
This must be done on excel using formulas. I understand option 1
however for option 2 and 3 I don't know how to get the PV factor
percentage in order for me to complete the problem.
E26-23 Using the time value of money Congratulations! You have won a state lottery. The state lottery offers you the follow- ing (after-tax) payout options: Option #1: Option #2: Option #3: $12,000,000 after five years $2,150,000 per year for five years $10,000,000 after three...
You just won the El Chapo Lottery and now you have a choice of payout plans PAYOUT 1: You may elect to receive a lump sum of $5,000 kwenty-five years from today. PAYOUT 2: You can take $2,000 today PAYOUT 3: You may choose to receive 10 annual payments of $500 with the first payment given to you four years from today You have no immediate need for the money, so will put any and all cash flows that you...
Most questions answered within 3 hours.
-
What are the negative effects of abruptly stopping the use of
all fossil fuels? Give at...
asked 6 minutes ago -
Given that many conflict are the result of different parties having
different interests, is it possible...
asked 11 minutes ago -
A 750 g block can slide uniformly along the horizontal track
when a string attached to...
asked 14 minutes ago -
In 2017, Juan entered into a contract to write a book. The
publisher advanced Juan $50,000,...
asked 28 minutes ago -
Determine the number of kinds of protons in each molecule (w/
respect to NMR spectroscopy). Drawing...
asked 38 minutes ago -
A jeweler whose near point is 68 cm from his eye uses a
magnifying glass as...
asked 36 minutes ago -
A company wants to determine how many units of each of two
products, A and B,...
asked 40 minutes ago -
The blood pressure of a person changes throughout the day.
Suppose the systolic blood pressure of...
asked 49 minutes ago -
A chemistry student desired to study sulfur. Sulfur exhibited
the following characteristics with oxygen:
(a) It...
asked 44 minutes ago -
An Atwood machine is constructed of a solid-disk frictionless
pulley of mass m3 and radius R....
asked 46 minutes ago -
what are the advantages of lanthanum hexaboride over tungsten
filament for electron emission
what is the...
asked 48 minutes ago -
Question 5
Your uncle offers to sell you his vintage Rolls Royce. He
suggests a payment...
asked 53 minutes ago