Please help me.Don't use any AI.It's strictly prohibited. After hearing a knock at your front door, you are surprised to see the Prize Patrol from a large, well-known magazine subscriptioncompany. It has arrived with the good news that you are the big winner, having won $31 million. You have three options:a. Receive $1.55 million per year for the next 20 years..b. Have $10.75 million today.c. Have $2.5 million today and receive $1,250,000 for each of the next 20 years.Your financial adviser tells you that it is reasonable to expect to earn 14 percent on investments.Required:1. Calculate the present value of each option. (Future Value of $1,Present Value of $1, Future Value Annuity of $1, Present ValueAnnuity of $1.)2. Determine which option you prefer.Complete this question by entering your answers in the tabs below.Required 1 Required 2Calculate the present value of each option. (Future Value of $1,Present Value of $1, Future Value Annuity of $1,Present Value Annuity of $1.)Note: Use appropriate factor(s) from the tables provided. Round your final answer to the nearest whole dollar. Enter youranswers in dollars, not in millions.Present ValueOption AOption BOption CShow less

Answered: After hearing a knock at your front…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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After hearing a knock at your front door, you are surprised to see the Prize Patrol from a large,well-known magazine subscription company. It has arrived with the good news that you are the bigwinner, having won “$20 million.” You discover that you have three options: (1) you can receive$1 million per year for the next 20 years, (2) you can have $8 million today, or (3) you can have $2million today and receive $700,000 for each of the next 20 years. Your financial adviser tells youthat it is reasonable to expect to earn 10 percent on investments. Which option do you prefer? Whatfactors influence your decision?TIP: All three scenarios require you to determine today’s value of the various payment options.These are present value problems.
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After hearing a knock at your front door, you are surprised to see the Prize Patrol from your state's online lottery agency. Upon opening your door, you learn you have won the lottery of $12.5 million. You discover that you have three options: (1) you can receive $1.25 million per year for the next 10 years, (2) you can have $10 million today, or (3) you can have $4 million today and receive $1 million for each of the next eight years. Your lawyer tells you that it is reasonable to expect to earn an annual return of 10 percent on investments. Required: 1. What is the present value of the above options? (FV of $1, PV of $1, FVA of $1, and PVA of $1) Note: Use appropriate factor(s) from the tables provided. 2. Which option do you prefer? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 2 above options? What is the present Note: Enter your answers in whole dollar not in millions (i.e., 1,000,000 not 1.0), rounded to nearest whole dollar.…
Congratulations! You have just won the lottery! However, the lottery bureau has just informed you that you can take your winnings in one of two ways. You can Select to receive a payment of $1,000,000 now or a payment of $1,750,000 in five years. Assume you can earn 5% on funds that you invest today. How much money would you have in five years if you take the immediate $1,000,000 payment and invest it? What does this tell you about the wisdom of selecting the immediate payment versus the future payment? Using the same 5% interest rate, what is the present value of the $1,750,000 that you could receive in five years? What does this calculation tell you about which lottery payout option you should choose? What do your results suggest as a general rule for approaching such problems? (Make your choices based purely on the time value of money.
A lottery corporation sells a ticket for a chance to win $500,000. If you win, the prize winnings will be spread out over time with your first payment of $150,000 today. The second payment of $ 150,000 would be released to you in a year, and the last payment of $200,000 would be released the following year. If you could earn 3.5% compounded annually, what is the value of the prize today?
Please explain proper steps by Step and Do Not Give Solution In Image Format ? And Fast Answering Please ?
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The Clearinghouse Sweepstakes has just informed you that you have won $1 million. The amount is to be paid out at the rate of $56,000 a year for the next 20 years. With a discount rate of 13 percent, what is the present value of your winnings? Use Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
The Clearinghouse Sweepstakes has just informed you that you have won $1 million. The amount is to be paid out at the rate of $56,000 a year for the next 20 years. With a discount rate of 13 percent, what is the present value of your winnings? Use Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Present valuo
Mc Gregor has just won a prize in a game show with the winning prize worth RM30 million. However, he was given two options to receive those prizes: Ja. Option 1: Receive RM1 million for next 30 years beginning now. b. Option 2: Receive RM1.5 million each year from year 1 until 10" year, RM500,000 from 11 to 20 years and RM1 million from 21 until 30 years. Required : (i) Suggest which of the two is the better option and assuming the interest rate at 7 percent for the next 30 years. (Please show your work). (ii) If she is offered third options, which is to receive RM12 million one lumD Sum amount now. What is the rate of interest, that makes Mc Gregor indifferent to choose either option one or three (Show the Janswer to two decimal points)?
You are the lucky winner of the Ohio Lottery ! Congratulations. The Lottery tells you that you have won a $20,000,000 prize that will be paid in annual installments of $1,000,000 for 20 years. If interest rates on alternative investments in the market are 8%, what is the actual value (PV) of your prize? Round to the nearest 1,000, and show your work.
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

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