Congratulations! You have won the lottery. The lottery offers you the following payout options: Option #1: $10,256,000 after 2 years. Option #2: $2,020,000 per year for 2 years. Option #3: $10,786,000 after 1 years. Use the Present Value of $1 or the Present Value of Ordinary Annuity of $1 tables from above. Round final present value to the nearest whole number. When calculating the present values, be sure to use the full present value factor or annuity factor to 3 decimal places in your calculations. Note that the answer key will show the values rounded to 2 decimal places due to display limitations. Assuming you could earn 10% on your funds, which option would you prefer? 1) Amount of Cash X Present Value Factor = Present Value Rank 1-3 (1 = best choice) X = 2) Amount of Cash X Annuity Value Factor = Present Value Rank 1-3 (1 = best choice) X = 3) Amount of Cash X Present Value Factor = Present Value Rank 1-3 (1 = best choice)
Congratulations! You have won the lottery. The lottery offers you the following payout options: Option #1: $10,256,000 after 2 years. Option #2: $2,020,000 per year for 2 years. Option #3: $10,786,000 after 1 years. Use the Present Value of $1 or the Present Value of Ordinary Annuity of $1 tables from above. Round final present value to the nearest whole number. When calculating the present values, be sure to use the full present value factor or annuity factor to 3 decimal places in your calculations. Note that the answer key will show the values rounded to 2 decimal places due to display limitations. Assuming you could earn 10% on your funds, which option would you prefer? 1) Amount of Cash X Present Value Factor = Present Value Rank 1-3 (1 = best choice) X = 2) Amount of Cash X Annuity Value Factor = Present Value Rank 1-3 (1 = best choice) X = 3) Amount of Cash X Present Value Factor = Present Value Rank 1-3 (1 = best choice)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
| Periods | 1.00% | 2.00% | 3.00% | 4.00% | 5.00% | 6.00% | 7.00% | 8.00% | 9.00% | 10.00% |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | 0.990 | 0.980 | 0.971 | 0.962 | 0.952 | 0.943 | 0.935 | 0.926 | 0.917 | 0.909 |
| 2 | 0.980 | 0.961 | 0.943 | 0.907 | 0.907 | 0.890 | 0.873 | 0.857 | 0.842 | 0.826 |
| 3 | 0.971 | 0.942 | 0.915 | 0.889 | 0.864 | 0.840 | 0.816 | 0.794 | 0.772 | 0.751 |
| 4 | 0.961 | 0.924 | 0.888 | 0.855 | 0.823 | 0.792 | 0.763 | 0.735 | 0.708 | 0.683 |
| 5 | 0.951 | 0.906 | 0.863 | 0.822 | 0.784 | 0.747 | 0.713 | 0.681 | 0.650 | 0.621 |
| 6 | 0.942 | 0.888 | 0.837 | 0.790 | 0.746 | 0.705 | 0.666 | 0.630 | 0.596 | 0.564 |
| 7 | 0.933 | 0.871 | 0.813 | 0.760 | 0.711 | 0.665 | 0.623 | 0.583 | 0.547 | 0.513 |
| 8 | 0.923 | 0.853 | 0.789 | 0.731 | 0.677 | 0.627 | 0.582 | 0.540 | 0.502 | 0.467 |
| 9 | 0.914 | 0.837 | 0.766 | 0.703 | 0.645 | 0.592 | 0.544 | 0.500 | 0.460 | 0.424 |
| 10 | 0.905 | 0.820 | 0.744 | 0.676 | 0.614 | 0.558 | 0.508 | 0.463 | 0.422 | 0.386 |
Present Value of Ordinary
| Periods | 1.00% | 2.00% | 3.00% | 4.00% | 5.00% | 6.00% | 7.00% | 8.00% | 9.00% | 10.00% |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | 0.990 | 0.980 | 0.971 | 0.962 | 0.952 | 0.943 | 0.935 | 0.926 | 0.917 | 0.909 |
| 2 | 1.970 | 1.942 | 1.913 | 1.886 | 1.859 | 1.833 | 1.808 | 1.783 | 1.759 | 1.736 |
| 3 | 2.941 | 2.884 | 2.829 | 2.775 | 2.723 | 2.673 | 2.624 | 2.577 | 2.531 | 2.487 |
| 4 | 3.902 | 3.808 | 3.717 | 3.630 | 3.546 | 3.465 | 3.387 | 3.312 | 3.240 | 3.170 |
| 5 | 4.853 | 4.713 | 4.580 | 4.452 | 4.329 | 4.212 | 4.100 | 3.993 | 3.890 | 3.791 |
| 6 | 5.795 | 5.601 | 5.417 | 5.242 | 5.076 | 4.917 | 4.767 | 4.623 | 4.486 | 4.355 |
| 7 | 6.728 | 6.472 | 6.230 | 6.002 | 5.786 | 5.582 | 5.389 | 5.206 | 5.033 | 4.868 |
| 8 | 7.652 | 7.325 | 7.020 | 6.733 | 6.463 | 6.210 | 5.971 | 5.747 | 5.535 | 5.335 |
| 9 | 8.566 | 8.162 | 7.786 | 7.435 | 7.108 | 6.802 | 6.515 | 6.247 | 5.995 | 5.759 |
| 10 | 9.471 | 8.983 | 8.530 | 8.111 | 7.722 | 7.360 | 7.024 | 6.710 | 6.418 | 6.145 |
Congratulations! You have won the lottery. The lottery offers you the following payout options:
Option #1: $10,256,000 after 2 years.
Option #2: $2,020,000 per year for 2 years.
Option #3: $10,786,000 after 1 years.
Use the Present Value of $1 or the Present Value of Ordinary Annuity of $1 tables from above. Round final present value to the nearest whole number.
When calculating the present values, be sure to use the full present value factor or annuity factor to 3 decimal places in your calculations. Note that the answer key will show the values rounded to 2 decimal places due to display limitations.
Assuming you could earn 10% on your funds, which option would you prefer?
1)
| Amount of Cash | X | Present Value Factor | = | Present Value | Rank 1-3 (1 = best choice) |
|---|---|---|---|---|---|
| X | = |
2)
| Amount of Cash | X | Annuity Value Factor | = | Present Value | Rank 1-3 (1 = best choice) |
|---|---|---|---|---|---|
| X | = |
3)
| Amount of Cash | X | Present Value Factor | = | Present Value | Rank 1-3 (1 = best choice) |
|---|---|---|---|---|---|
| X | = |
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