Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $64,000 cash immediately, (2) $20,000 cash immediately and a six-period annuity of $8,000 beginning one year from today, or (3) a six -period annuity of $13,000 beginning one year from today. (FV of $1, PV of $1, FVA of $1, FVAD of $1 and PVAD of $1) Required 1. Assuming an interest rate of 6%, determine the present value for the above options. Which option should Alex choose? Annuity PV Annuity Immediate PV Option Payment Cash Option 1 ____________ _________ + __________ = $__________0 Option 2 ____________ _________ + __________ = $ 0 Option 3 ____________ __________ + ___________ = $ 0 Which option should Alex choose?
Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $64,000 cash immediately, (2) $20,000 cash immediately and a six-period
Required 1.
Assuming an interest rate of 6%, determine the
Annuity PV Annuity Immediate PV Option
Payment Cash
Option 1 ____________ _________ + __________ = $__________0
Option 2 ____________ _________ + __________ = $ 0
Option 3 ____________ __________ + ___________ = $ 0
Which option should Alex choose? _______________
Required 2.
The Weimer Corporation wants to accumulate a sum of money to repay certain debts due on December 31, 2030. Weimer will make annual deposits of $100,000 into a special bank account at the end of each of 10 years beginning December 31, 2021. Assuming that the bank account pays 7% interest compounded annually, what will be the fund balance after the last payment is made on December 31, 2030? (Round your final answers to nearest whole dollar amount.)
Table or calculator function: __________________
Payment __________________
n = __________________
I = __________________
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