Note: Take the absolute value of the present value when answering this question. Using the table you just filled out, along with 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 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, along with your financial calculator, yields a present value for option 2 of approximately v and (when the interest rate is 9.00%). Based on this, Dmitri should choose option a present value for option 3 of approximately if he seeks to maximize present value. Assume the interest rate is 10.00%, entered as 10 on your financial calculator. Note: Take the absolute value of the present value when answering this question.

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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Note: Take the absolute value of the present value when answering this question.
Using the table you just filled out, along with 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, along with your 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 9.00%). Based on this, Dmitri should choose option
if he seeks to maximize present value.
Assume the interest rate is 10.00%, entered as 10 on your financial calculator.
Note: Take the absolute value of the present value when answering this question.
Using the table you just filled out, along with your 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 10.00%). Based on this, Dmitrí should choose option
v if he seeks to maximize present value.
As the interest rate increases, option 1 becomes
attractive.
Transcribed Image Text:Note: Take the absolute value of the present value when answering this question. Using the table you just filled out, along with 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, along with your 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 9.00%). Based on this, Dmitri should choose option if he seeks to maximize present value. Assume the interest rate is 10.00%, entered as 10 on your financial calculator. Note: Take the absolute value of the present value when answering this question. Using the table you just filled out, along with your 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 10.00%). Based on this, Dmitrí should choose option v if he seeks to maximize present value. As the interest rate increases, option 1 becomes attractive.
Dmitri just won the lottery and must choose between three award options:
1. A lump sum of $20,000,000 received today
2. 15 end-of-year payments of $2,500,000
3. 40 end-of-year payments of $1,800,000
For each option in the table, indicate which values to enter for each variable in your financial calculator.
Option 1
Option 2
Option 3
Lump Sum Payment
15 Payments
40 Payments
No. of Periods
I/YR V
= 15 ▼
I/YR V
= 40
Annual payment
%3D
%3D
Future Value
FV= 0
FV = 0
Present Value
$20,000,000
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 the table you just filled out, along with 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.
Transcribed Image Text:Dmitri just won the lottery and must choose between three award options: 1. A lump sum of $20,000,000 received today 2. 15 end-of-year payments of $2,500,000 3. 40 end-of-year payments of $1,800,000 For each option in the table, indicate which values to enter for each variable in your financial calculator. Option 1 Option 2 Option 3 Lump Sum Payment 15 Payments 40 Payments No. of Periods I/YR V = 15 ▼ I/YR V = 40 Annual payment %3D %3D Future Value FV= 0 FV = 0 Present Value $20,000,000 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 the table you just filled out, along with 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.
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