A contest winner can choose between two prizes: $800,000 in 40 years $3,000 today At a discount rate of 12%, which is the better choice? a) $800,000 in 40 years b) $3,000 today c) The winner should be indifferent d) Need more information
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- As the winner of a competition you are entitled to $5,000 at the end of next year, with this amount growing at 10% p.a. until the end of year 10. Assuming the interest rate for valuing this prize is 5% p.a., the future value of this prize at the end of year 10 is closest to: a.$59,233. b.$96,485. c.$153,634. d.The future value cannot be calculated.If offered the choice of receiving $500 today or $500 in five year's time, which option would you choose, and why? $500 today because time has value and by receiving the money today you can put it to use immediately. O $500 in five year's time because time has value and so the $500 will be worth more then. $500 in five year's time since waiting a year does not involve an opportunity cost.you have just won the lottery and will receive $460,000 in one year. you will receive payments for 21 years, and the payments will increase 4 percent per year. if the appropriate discount rate is 11 percent, what is the present value of your winnings? Please explain how to solve using the financial calculator to show and explain steps thanks
- You are offered $80,000 today or $400,000 in 10 years. Assuming that you can earn 16 percent on your money, which should you choose? Question content area bottom Part 1 If you are offered $400,000 in 10 years and you can earn 16 percent on your money, what is the present value of $400,000? $enter your response here (Round to the nearest cent.)A game show contestant must choose between two prizes: $500,000 in 30 years or $5,000 today. Assuming a discount rate of 12%, which is the better choice? a. The $500,000 in 30 years b. $5,000 today c. The contestant should be indifferent d. Need more informationAs a prize, you are offered of one of the following three options:Option 1: $6,000 today, orOption 2: $8,500 in five years, orOption 3: $10,000 in seven years.Assuming you can earn 7% on your money, which option should you choose. (Brieflyexplain your choice and show all working to justify your answer.)
- You intend to endow a scholarship that pays $5,000 every 6 months, starting 6 months from now. If the appropriate discount rate is 3% per 6-month period, how much money will you have to donate ← today to endow the scholarship? You will need to donate $ (Round to the nearest dollar.) CITHow much would you invest today in order to receive $30,000 in each of the following? (for further instructions on present value in Excel, see the Suggested Resources in the textbook: https://cnx.org/contents/kg0cimBs@14.13:bDQCmuJO@6/Suggested-Resources) a. 10 years at 9% b. 8 years at 12% c. 14 years at 15% d. 19 years at 18%USE EXCEL TO WORK THIS OUT AND SHOW THE FORMULA! What is the present value of the following future amounts? a. $800 to be received 10 years from now discounted back to the present at 10 percent b. $300 to be received 5 years from now discounted back to the present at 5 percent c. $1,000 to be received 8 years from now discounted back to the present at 3 percent d. $1,000 to be received 8 years from now discounted back to the present at 20 percent
- A morning radio show offered the following four prizes as alternative prizes for one of its competitions. Which prize is the most valuable if your discount rate is 6%? (Show working to justify your answer.) (a) $5,000 per year, forever, with the first amount paid after 1 year. (b) $12,000 per year for eight years, with the first amount paid today. (c) $20,000 today and $80,000 six years from now. (d) $15,000 per year for ten years, with the first amount paid at year 5. (e) State the most valuable prize. (Give a reason for your choice.)You have just won the lottery and will receive $580,000 in one year. You will receive payments for 28 years, which will increase 3 percent per year. The appropriate discount rate is 11 percent. Required: What is the present value of your winnings? $51,626,112 $6,102,947 $6,357,236 $31,217 $51,626,112 Only typed answer and give fastYou have won the lottery, and you must choose between three award options. You can select one of the following options: To receive a lump sum today of $75 million, To receive 10 end-of-year payments of $12 million, to receive 30 end-of-year payments of $8 million. If you expect to earn 9% annually: What is the present value of alternative ii? What is the present value of alternative iii? Which one you must choose?