Bill Swill decides to try his luck at Powerball where the projected winnings are $12,000,000. If he wins, he can choose the annuity option (to be paid over 20 years) or a lump sum settlement that he can invest at 8% interest. How much must the lump sum option be to make the lump sum option equal to the annuity option (rounded)?

Q: The winner can choose to receive a lump sum of $1,000,000 now or annual payments of $50,000 for next…

A: A study that proves that the 1value of money today is higher than the future value of money is term…

Q: You are going to resign in your firm and given an option of retiring with a lump sum of 20,000 or an…

A: Option -1  Lump sum 20,000 Option -2 Annuity of 2500 for 10 years at 6% interest rate

Q: What is the present value of the annuity if the prevailing interest rate is 10% per year?

A: Time value of money (TVM) refers to the method used to measure the amount of money at different…

Q: Your client is 34 years old. She wants to begin saving for retirement, with the first payment to…

A: To solve this problem, we will use the future value of an annuity formula and the present value of…

Q: An investor has just won the lottery and will receive $200,000 per year at the end of each of the…

A: present value refers to the concept of the time, value of money which is used by investors for…

Q: Each of the following situations is independent. Work out your own solution to each situation, and…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: Daniel has just won the Flyball Lottery. Ha has tvo options for recsiving his prize. The first…

A: Answer a) Calculation of Present value if amount can be reinvested at 10% Option -1 Since the amount…

Q: You have the option to take a lump sum payout of $10,000 or take $1000 annually for 8 years. Which…

A: You have 2 option :(1) Take lump sum amount of $10,000 today0r (2) take $1000 annually for 8 years

Q: Your brother has offered to give you either $35,000 today or $70,000 in 11 years. If the interest…

A: Present Value is the current price of future value which will be received in near future at some…

Q: Your brother has offered to give you either $65,000 today or $130,000 in 13 years. If the interest…

A: Solution: When an amount is receivable, every person will choose to receive higher amount. So, in…

Q: As a prize, you are offered of one of the following three options: Option 1: $6,000 today, or Option…

A: Time value of money:   The value of money changes over a period time. The value of money depends on…

Q: George has just won the Flyball Lottery. He has two options for rec payment today. The second option…

A: Present value is the value today of a future amount of money, discounted at an appropriate rate of…

Q: Ken Francis is offered the possibility of investing $10,062 today; in return, he would receive…

A: Present Value is the value of one dollar as of today which will be received in future. For the…

Q: Your client is 38 years old. She wants to begin saving for retirement, with the first payment to…

A: Given: Particulars   Client age 38 Savings 5000 Return 10% age 65 age  70

Q: Bill Swill decides to try his luck at Powerball where the projected winnings are $12,000,000. If he…

A: Given in the question:Interest Rate = 8%Time Frame = 20 YearsAmount of Winnings = $12,000,000In…

Q: Bill Padley expects to Invest $19,000 for 2 years, after which he wants to receive $22,990.00. What…

A: Present Value = pv = $19,000Time = t = 2 yearsFuture Value = fv = $22,990

Q: A man is offered two proposals to invest his money. The first offer is to invest $ 20,000 in the…

A: We need to calculate future value of both investments. Higher future value proposal will be chosen…

Q: Your brother has offered to give you either $60,000 today or $120,000 in 10 years. If the interest…

A: When an amount is receivable, every person will choose to receive higher amount. So, in the given…

Q: A 65 year-old man is retiring and can take either $500,000 in cash or an ordinary annuity that…

A: Solution Concept Time value of money As per the concept of time value of money , the value of amount…

Q: Marian Plunket owns her own business and is considering an investment. If she undertakes the…

A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…

Q: Connor has $550,000 to invest in a 5 year annuity. Assuming the time value of money is 10%, what…

A: PV = Present Value (in this case, the amount Connor has, which is $550,000)PMT = Annual cash flow…

Q: Ahmed is offered OMR.  5000 four years from now or OMR.  4000 in cash today.  Suggest Ahmed as to…

A: Present Value(PV) is computed by discounting future amount using discount rate that is yet to…

Q: our client is 21 years old. She wants to begin saving for retirement, with the first payment to come…

A: There is a need to plan for retirement and if done on time with proper planning based on time value…

Q: Benjamin knows that he will be receiving $100,311 to settle an insurance claim, but he will not…

A: Simple discount refers to the method of calculation of the amount received and interest paid where…

Q: ne of the following options and has asked for your help in terms of a payout from his trust fund: he…

A: Option 1 Lump sum payment = 2,150,000   Option 2 Annual Payment = 225,000 N = 14 years   Instance 1…

Q: How much would you accept in a lump sum today, in place of a lottery payment of $35,000 at the end…

A: Formula:

Q: Your grandfather would like to share some of his fortune with you. He offers to give you money under…

A: Present value refers to the discounted value of the future expected cash flows till the maturity of…

Q: Ronald has an investment opportunity that promises to pay him $55,000 in three years. He could earn…

A: Given: Future value = $55,000 Years = 3 Interest rate = 6%

Q: Prudential Life Insurance Co. is trying to sell you an investment policy that will pay you and your…

A: Annual Payment = p = K200,000 Required rate of return = r = 6.5%

Q: n Francis is offered the possibility of Investing $4,266 today. In return, he would receive $12,000…

A: Present Value is the value of one dollar as of today which will be received in future. For the…

Q: Angel would like to start investing his money. He has $10,000 that he hopes to use as a down payment…

A: Future Value refers to the value of the current asset or investment or of cash flows at a specified…

Q: You have received $200,000 from the PowerBall Lottery and want to have half that amount available…

A: Total lottary amount = $200,000 Amount required at retirement (FV) = $200,000/2 = $100,000 Interest…

Q: Ronald has an investment opportunity that promises to pay him $52,000 in three years. He could earn…

A: Present value = Future value * Present value of $1 table factor

Q: Suppose that Paolo is 45 years old and has no retirement savings. He wants to begin saving for…

A: Savings per year = $12,000Average annual  return =8%Current age = 45 years

Q: (Related to Checkpoint 5.4) (Present value) Sarah Wiggum would like to make a single investment and…

A: Variables in the question: FV=$2.4 millionN=35 yearsRate=7% (annually)

Q: u are planning to purchase a house for your son on his 21st birthday. He is now 11 years old. The…

A: There is need of financial planning for the future needs based on the time value of money and…

Q: Your grandfather would like to share some of his fortune with you. He offers to give you money under…

A: A future sum of money or a series of future cash flows are valued today using the financial concept…

Q: ​ (Future value​) Sarah Wiggum would like to make a single​ lump-sum investment and have ​$1.7…

A: Case 1 -  If the annual return is 7% Amount Sarah must invest today = $255,683.76 Case 2 -  If the…

Q: Peter won a lottery and must decide among the following options: a. $260 at the beginning of every…

A: Present value represents the current value of the future stream of cash flow of investment.

Q: Anna has recently won a lottery. The payout is in one of two forms. She can take $10 million today…

A: Option 1: $10 million todayOption 2: $25 million in 10 years with inflation rate of 5%Future Value…

Q: An 8 year par value bond with semiannual coupons at 6% convertible semiannual has a price of 1050.…

A: Callable bonds are one in which the issuer of the bond has the right to call back the bond. In this…

Q: (Related to Checkpoint 5.4) (Present value) Sarah Wiggum would like to make a single investment and…

A: Present value is an estimate of the present value of future cash values ​​that may be received at a…

Q: How much are the 2 million dollars received annually over the course of 25 years worth in terms of…

A: Time value of money (TVM) means that the amount of money received in the present period will have…