Congratulations you just won the Colorado Lotto!!! The cash flows below are related to theyearly annuitized jackpot. Assuming you take the Annuitized Jackpot (cash flows below), whatwould JG Wentworth pay if you called 877-CASH-NOW and offered to sell your annuity?Assume JG Wentworth wants a 10% annual rate of return on their investment.2003004001-1011-1516-20You decide to reject the sale offer from JG Wentworth. How much would you have if youinvested the jackpot winnings in the Russell 2000 index and generated a 12% annualized rate ofreturn each and every year for 30 years?After calculating the Future Value of the Russell 2000 index, how much could you pull out overthe next ten years (31-40) if you moved the money into a safer bond fund offering 4% per year?

Data given: Year Annuity 1-10 200 11-15 300 16-20…

Answered: Congratulations you just won the…

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

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You have to decide whether to invest $100 in a friend's enterprise, where in a year's time the money will increase to $130. You have agreed that your friend will then repay you $120, keeping $10 for himself But instead he may choose to run away with the whole $130. Any of your money that you don't invest in the enterprise you can invest elsewhere safely at the prevailing rate of interest r and get $100 (1+r) next year. For interest rate r> __A___% there is an equilibrium outcome of the infinitely repeated game in which each period you invest with your friend and he repays as agreed. If the rate of interst is 10% per year, an alternative profit-splitting agreement giving $__B___ for the friend is an equilibrium outcome of the infinitely repeated game, where each period you invest with your friend and he repays as agreed. Answer A= ? Answer B= ?
1. You have two options to purchase a car. Your first option is to purchase the car at $26.200 and pay for it over 36 months with equal monthly payments at 1.9 % interest per year. The second option is for you to purchase the car immediately with cash at a rebate or discounted price lower than $25,000. C. a. Draw a cash flow diagram for the first option b. Using the appropriate compounding interest factor provided on the formula sheet, determine your monthly payments Draw the cash flow diagram that will enable you to determine the equivalent present cost of the total loan repayments you made in (b) above, if funds are presently earning 5 % annual interest compounded annually d. Using the appropriate compounding interest factor provided on the formula sheet, determine the equivalent present cost of the total loan repayments. e. Which of the two options will you choose and why?
Quantitative Problem: You need $18,000 to purchase a useel car. I Your wealthy uncle is willing to lend you the money as an amortized loan. He would like. would like you to make annual payments for 4 years with the first payment to be made one year from today. He requires on 8% anual return. a) What will be your amual loan payments? Do not round intermediate calculations. Round your answer to the nearest cent. b) How much of your payment will be first applied to interest and to principal repayment? Do not round intermediate calculations. Round to the nearest cent. your answers Interest Principal repayment m
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Assume that you have just won the lottery. Lotto officials offered you the choice of two alternative payouts: ₱10,000,000 today; or ₱30,000,000 seven years from now. As a wise and financial literate individual, which payment will you choose if relevant interest rate is 10%? Explain your choice in not more than ten (10) sentences and support it with your computation.
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
A new investment opportunity for you is an annuity that pays $560 at the beginning of each year for 3 years. You could earn 5.4% on your money in other investments with equal risk. What is the most you should pay for the annuity? Group of answer choices $1,595.40 $1,756.86 $1,517.12 $1,442.76 $1,696.61
Your answer is incorrect. Sheridan Company is considering investing in an annuity contract that will return $33,500 annually at the end of each year for 15 years. Click here to view the factor table. What amount should Sheridan Company pay for this investment if it earns an 10% return? (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round answer to 2 decimal places, e.g. 25.25.) Sheridan Company should pay $ eTextbook and Media Save for Later SUPP Attempts: 2 of 3 used Submit Answer
Suppose you just won the state lottery, and you have a choice between receiving $2,515,000 today or a 20-year annuity of $220,000, with the first payment coming one year from today. What rate of return is built into the annuity? Disregard taxes. O a. 6.88% O b. 12.96% O c. 6.04% O d. 5.69% O e. 8.75%
You have a chance to buy an annuity that pays $5,700 at the end of each year for 3 years. You could earn 5.5% on your money in other investments with equal risk. What is the most you should Dav for the annuity? a $15,378.22 b. $16,454.70 c. $11,687.45 d. $14,763.09 e. $13.532.83
Suppose that Dmitri just won the lottery and must choose between three award options: 1. A lump sum of $40,000,000 received today 2. 15 end-of-year payments of $5,000,000 3. 40 end-of-year payments of $3,600,000 Assume the interest rate is 8.00%, entered as 8 on your financial calculator. Note: Take the absolute value of the present value when answering this question. Using a financial calculator yields a present value for option 2 of approximately and a present value for option 3 of approximately (when the interest rate is 8.00%). Based on this, Dmitri should choose option if he seeks to maximize present value. Now assume the interest rate is 9.00%, entered as 9 on your financial calculator. Note: Take the absolute value of the present value when answering this question. Using the table you just filled out and a financial calculator, yields a present value for option 2 of approximately and a present value for option 3 of approximately v (when the interest rate is 9.00%). Based on…
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