answer must be correct or i will give down vote Congratulations! You have just won the Super Lottery valued at 25 million dollars! Under lottery rules, you have been given the option of accepting a one- time lumpsum payment of $10.5 million today or equal annual payments for the next 40 years. Required: Calculate the annual payment that makes you indifferent to either option?

answer must be correct or i will give down vote Congratulations! You have just won the Super Lottery valued at 25 million dollars! Under lottery rules, you have been given the option of accepting a one- time lumpsum payment of $10.5 million today or equal annual payments for the next 40 years. Required: Calculate the annual payment that makes you indifferent to either option?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

urgent
Assume that Aliza has a winning lottery ticket and she are the given the option of accepting the value of P1,000,000 paying interest three years from now or taking the present value of the P1,000,000 now. The sponsor of the prize is using a 6% interest and discount rate. a. If she choose to receive the present value of the prize now, how much will she receive? b. If she choose to receive the value 3 years from now, how much will she receive? c. Which of the options will give her higher amount?
Your uncle offers you a choice of $106,000 in 10 years or $43,000 today. Use Appendix B as an approximate answer, but calculate your final answer using the formula and financial calculator methods. a-1. If money is discounted at 9 percent, what is the present value of the $106,000? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Present value a-2. Which offer should you choose? $106,000 after 10 years O $43,000 today
What is the present value of $250,000 to be received after 40 years with a 15 percent discount rate? Use Appendix B as an approximate answer, but calculate your final answer using the formula and financial calculator methods. Note: Do not round intermediate calculations. Round your final answer to 2 decimal places.
Da
Your grandfather has offered you a choice of one of the three following alternatives: $10,000 now; $4,800 a year for eight years; or $56,000 at the end of eight years. Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. a-1. Assuming you could earn 9 percent annually, compute the present value of each alternative: (Do not round intermediate calculations. Round your final answers to 2 decimal places.) a-2. Which alternative should you choose? multiple choice 1 $56,000 received at end of eight years $4,800 received each year for eight years $10,000 received now b-1. If you could earn 10 percent annually, compute the present value of each alternative: (Do not round intermediate calculations. Round your final answers to 2 decimal places.) b-2. Which alternative should you choose? multiple choice 2 $56,000 received at end of eight years $4,800 received each year…
Peggy just won the lottery! She could either receive $75,000 today or $1,000,000 in 40 years. At what rate of interest, compounded annually, would Peggy be indifferent between accepting the lottery winnings of $75,000 today and investing it on her own? A) 6.7%B) 6.1%C) 5.5%D) 2.4%
Ellen won a lottery that will pay her $100,000 a year for 20 years, or she can accept $1,500,000 today. A)Assuming she can earn 2.5% and maximizing her winnings is the only consideration, which offer should she accept? Show your calculations. B)Assuming she can earn 3%, what would be the lump sum today equivalent to the 20 payments of $100,000?
I recently found a real-life advertisement in the newspaper. (Only the phone number has been changed.) Suppose that you have won a $20,000,000 lottery, paid in 20 annual installments. How much would be a fair price to be paid today for the assignment of this prize? Assume the money could be invested at 12%. (Assume the lottery pays out as an ordinary annuity. Round your answer to the nearest cent.) $ la-7:30p ffordable. 555-8310. Massage 55 in/o CARE 555-372 DUCH 8-3590 * 21 Massage In Call 253 E LOAN WANTED: $150,000, se- sold unless cured by approx. $600,000 clearly indic equity In four sepsele proper- and telemai pay 1476 and five ptain the be en earni or implied. ma es eve advertiseme or do no or quirement Have exc. credit. 555-4285. *** WE PAY CASH *** for R.E notes, lotteries, annuities, bus. notes, Inheritances. Please call 800-555-7853. 2 ENTREPRENEURS need invesnot be resp to establish a juice error, we as Min. S Interest. 555-4668. 15% be reportec may take e $6000 NEEDED for…
You have just won the Super Duper Lotto. Although the prize is advertised as $30 million, you actually get $10 million now and $1 million per year for the next 20 years (starting one year from now). Your discount rate is 7%. What is present value of your winnings? (Do not round intermediate calculations. Report your result in millions of dollars. Round the final answers to 2 decimal places. Omit $ sign and the word "million" in your response. For example, if your answer is $1,234,567 just write 1.23.)
You have an opportunity to buy a perpetuity that pays $400 a year forever starting a year from now for $1,500. What interest rate makes this a fair price? Instruction: Round to three decimal places. E.g., if your answer is 0.0106465 or 1.06465%, you should type ONLY the number .011, neither 0.0106465, 0.0106, nor 1.065. Otherwise, Blackboard will treat it as a wrong answer.
You have just received notification that you have won the $2.05 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you're around to collect), 75 years from now. What is the present value of your windfall if the appropriate discount rate is 10 percent? Note: Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89. Present value