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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 big winner, having won $36 million. You have three options, (a) Receive $1.8 million per year for the next 20 years. (b) Have $12 million today. (c) Have $2 million today and receive $1,500,000 for each of the next 20 years. Your financial adviser tells you that it is reasonable to expect to earn 13 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 Value Annuity of $1) (Use appropriate factor(s) from the tables provided. Round your final answer to the nearest whole dollar. Enter your answers in dollars, not in millions.) Present Value Option A Option B Option C 2. Determine which option you prefer. O Option B O Option C Option A

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 big winner, having won $36 million. You have three options, (a) Receive $1.8 million per year for the next 20 years. (b) Have $12 million today. (c) Have $2 million today and receive $1,500,000 for each of the next 20 years. Your financial adviser tells you that it is reasonable to expect to earn 13 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 Value Annuity of $1) (Use appropriate factor(s) from the tables provided. Round your final answer to the nearest whole dollar. Enter your answers in dollars, not in millions.) Present Value Option A Option B Option C 2. Determine which option you prefer. O Option B O Option C Option A

FINANCIAL ACCOUNTING
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 big winner, having won $36 million. You have three options. (a) Receive $1.8 million per year for the next 20 years. (b) Have $12 million today. (c) Have $2 million today and receive $1,500,000 for each of the next 20 years. Your financial adviser tells you that it is reasonable to expect to earn 13 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 Value Annuity of $1) (Use appropriate factor(s) from the tables provided. Round your final answer to the nearest whole dollar. Enter your answers in dollars, not in millions.) Present Value Option A Option B Option C 2. Determine which option you prefer. O Option B O Option C O Option A < Prev 5 of 9 Next > e to search %23 3. 2.
Transcribed Image Text: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 big winner, having won $36 million. You have three options. (a) Receive $1.8 million per year for the next 20 years. (b) Have $12 million today. (c) Have $2 million today and receive $1,500,000 for each of the next 20 years. Your financial adviser tells you that it is reasonable to expect to earn 13 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 Value Annuity of $1) (Use appropriate factor(s) from the tables provided. Round your final answer to the nearest whole dollar. Enter your answers in dollars, not in millions.) Present Value Option A Option B Option C 2. Determine which option you prefer. O Option B O Option C O Option A < Prev 5 of 9 Next > e to search %23 3. 2.
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