The state lottery's million-dollar payout provides for $1.4 million to be paid in 20 installments of $70 comma 000 per payment. The first $70, 000 payment is made immediately, and the 19 remaining $70,000 payments occur at the end of each of the next 19 years. If 9 percent is the discount rate, what is the present value of this stream of cash flows? If 18 percent is the discount rate, what is the present value of the cash flows? a. If 9 percent is the discount rate, the present value of the annuity due is $ nothing. (Round to the nearest cent.
Present value of annuity due=(1+rate)*Annuity[1-(1+interest rate)^-time period]/rate
1.Present value=1.09*70,000[1-(1.09)^-20]/0.09
=70,000*9.950114779
=$696,508.03(Approx).
2.Present value=1.18*70,000[1-(1.18)^-20]/0.18
=70,000*6.316240867
=$442,136.86(Approx).
The state lottery's million-dollar payout provides for $1.4 million to be paid in 20 installments of...
(Present value of annuity payments) The state lottery's million-dollar payout provides for $1.4 million to be paid in 20 installments of $70 comma 000 per payment. The first $70 comma 000 payment is made immediately, and the 19 remaining $70 comma 000 payments occur at the end of each of the next 19 years. If 11percent is the discount rate, what is the present value of this stream of cash flows? If 22 percent is the discount rate, what is...
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(Present value of annuity payments) The state lottery's million-dollar payout provides for $1.5 million to be paid in 20 installments of $75000 per payment. The first $75000 payment is made immediately, and the 19 remaining $75000 payments occur at the end of each of the next 19 years. If 8 percent is the discount rate, what is the present value of this stream of cash flows? If 16 percent is the discount rate, what is the present value of the...
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