e people shared the largest payout in lottery history of 1.5 billion dollars (500 million a piece). If one of them decided to take the cash out option of 327 million, this quantity is known as: (a) the monthly payment of the 500 million dollars of payments (b) the present value of the 500 million dollars of payments (c) the future value of the 500 million dollars of payments (d) this numb

e people shared the largest payout in lottery history of 1.5 billion dollars (500 million a piece). If one of them decided to take the cash out option of 327 million, this quantity is known as: (a) the monthly payment of the 500 million dollars of payments (b) the present value of the 500 million dollars of payments (c) the future value of the 500 million dollars of payments (d) this numb

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money

Section: Chapter Questions

Problem 9.20MCE

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Similar questions

Rita Gonzales won the $41 million lottery. She is to receive $1.5 million a year for the next 19 years plus an additional lump sum payment of $12.5 million after 19 years. The discount rate is 14 percent. What is the current value of her winnings? Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Doan Lucky won the $41 million lottery. She is to receive $1.8 million a year for the next 15 years plus an additional lump-sum payment of $14.0 million after 15 years. The discount rate is 11 percent. What is the current value of her winnings? Use Appendix B and Appendix D (Round "PV Factor" to 3 decimal places. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) Current Value
Here's a question you and 11 coworkers won 19 million which is 1,583,333.33 each from a lottery. If we are assuming you each received your share over 18 years and state lottery earns a 6 percent return on its funds , what is the present value of your prize before taxes if you request the up front cash option? Round answer to nearest dollar
The top prize for the state lottery is $115,700,000. You have decided it is time for you to take a chance and purchase a ticket. Before you purchase the ticket, you must decide whether to choose the cash option or the annual payment option. If you choose the annual payment option and win, you will receive $115,700,000 in 25 equal payments of $4,628,000—one payment today and one payment at the end of each of the next 24 years. If you choose the cash payment, you will receive a one-time lump sum payment of $53,355,093.34. If you can invest the proceeds and earn 9 percent, which option should you choose? (Round factor values to 3 decimal places, e.g. 1.521.) Lump sum paymentAnnual payment
We have often heard that a dollar today is worth more than a dollar tomorrow. In light of what you learned about annuities, what advice would you offer to a current lottery winner regarding the option they should use in determining whether or not they should accept a lump sum payment or the annual payment from the lottery commision? Why or why not ?
The top prize for the state lottery is $114,100,000. You have decided it is time for you to take a chance and purchase a ticket. Before you purchase the ticket, you must decide whether to choose the cash option or the annual payment option. If you choose the annual payment option and win, you will receive $114,100,000 in 16 equal payments of $7,131,250-one payment today and one payment at the end of each of the next 15 years. If you choose the cash payment, you will receive a one-time lump sum payment of $68,171,032.39. If you can invest the proceeds and earn 9 percent, which you would choose along with the present value of the annuity? (Round factor values to 4 decimal places, e.g. 1.5213 and final answer to 2 decimal places, e.g. 15.25.) Lump sum payment V
The multistate Powerball Lottery, worth $182 million, was won by a single individual who had purchased five tickets at $1 each. The winner was given two choices: receive 26 payments of $7 million each, with the first payment to be made now and the rest to be made at the end of each of the next 25 years, or receive a single lump-sum payment now that would be equivalent to the 26 payments of $7 million each. If the state uses an interest rate of 4% per year, find the amount of the lump sum payment.
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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%
How much would you accept in a lump sum today, in place of a lottery payment of $35,000 at the end of the next 20 years ($700,000 in total), assuming you could invest it at a 6 percent rate?
You have just inherited $560,000. You plan to save this money and continue to live off the money that you are earning in your current job. If you can invest at an interest rate of 5.46 percent annually, how long will it be before your inheritance is worth $1 million? (Round intermediate calculations to 5 decimal places, e.g. 2.51251 and final answer to 2 decimal places, e.g. 2,515.25.) Inheritance will be worth $1 million in years
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