21. A winner of sweepstake is given two options: option #1 receives a one-time payment of $ 1,000,000 or option #2 receives $80,000 now plus $80, 000 per year payments for 20 years. Whichever option selected is guaranteed. If the value of money is 5%, what is the present worth of option #2? What is the best choice? 996,960, 1,076, 960, 876, 200, NO CORRECT ANSWER, 990, 500, 1, 455, 600

21. A winner of sweepstake is given two options: option #1 receives a one-time payment of $ 1,000,000 or option #2 receives $80,000 now plus $80, 000 per year payments for 20 years. Whichever option selected is guaranteed. If the value of money is 5%, what is the present worth of option #2? What is the best choice? 996,960, 1,076, 960, 876, 200, NO CORRECT ANSWER, 990, 500, 1, 455, 600

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

Suppose a state lottery prize of $3 million is to be paid in 5 payments of $600,000 each at the end of each of the next 5 years. If money is worth 12%, compounded annually, what is the present value of the prize? (Round your answer to the nearest cent.)
Tom Thompson expects to invest $18,000 at 9% and, at the end of a certain period, receive $92,551. How many years will it be before Thompson receives the payment? (PV of $1. FV of $1. PVA of $1. and EVA of $1) (Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places.) Future Value $ 92,551 Present Value $ 18,000 = Table Factor Years years
14. What is the present value of $500 per year, at a discount rate of 8.25 percent, if the first payment is received 8 years from now and the last payment is received 18 years from now? Question 14 options: $1,944 $1,761 $2, 126 $2,025 $2, 166 18. What is the Present Value of $100,000 to be received in 22 years, assuming a discount rate of 11% Question 18 options: 10,066.87 14, 447.44 7,582.41 8, 994.34 12, 257.83
Show work please. Thank you
You have been offered a choice of: Offer One $6,000 now Offer Two $1,100 at the end of each year for 8 years at 6% Offer Three $14,000 at the end of 8 years at 6% Which offer is best?
(Related to Checkpoint 5.4) (Present-value comparison) You are offered $110,000 today or $400,000 in 14 years. Assuming that you can earn 11 percent on your money, which should you choose? If you are offered $400,000 in 14 years and you can earn 11 percent on your money, what is the present value of $400,000? $92797.9392797.93 (Round to the nearest cent.) Which offer should you choose? (Select the best choice below.) A. Choose $110,000 today because its present value is higher. B. Choose $400,000 in 14 years because its present value is higher.
1. You just won the PA lottery! The lottery offers you a choice: you may choose a lump sum today, or $89 million in 26 equal annual installments at the end of each year. Assume the funds can be invested (yield) at an annual rate of 7.65%. What is the lump sum that would equal the present value of the annual installments? : $89,000,000 $38,163,612 $41,083,128 $13,092,576
You win the lottery and the State is going to pay you some payments every year, and a final payment of 1,000,000 dollars after 30 years. Assuming a discount rate of 10 percent, in absolute value terms what is the difference in the present value of the State paying the million today or at the end of the 30 years? (a) 0 (b) 942691.55 (c) 1306897.64 (d) 234566.22
Edward Hughes has just won the state lottery and has the following three payout options for after−tax prize money: 1. $164,000 per year at the end of each of the next six years 2. $312,000 (lump sum) now 3. $520,000 (lump sum) six years from now The annual discount rate is 9%. Compute the present value of the second option. (Round to nearest whole dollar.) Present value of $1: 8% 9% 10% 1 0.926 0.917 0.909 2 0.857 0.842 0.826 3 0.794 0.772 0.751 4 0.735 0.708 0.683 5 0.681 0.650 0.621 6 0.630 0.596 0.564 7 0.583 0.547 0.513 A. $312,000 B. $104,000 C. $416,000 D.684,000

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