(Related to Checkpoint 6.2) (Present value of annuity payments) The state lottery's million-dollar payout provides for $1 million to be paid in 25 installments of $40,000 per payment. The first $40,000 payment is made immediately, and the 24 remaining $40,000 payments occur at the end of each of the next 24 years. If 12 percent is the discount rate, what is the present value of this stream of cash flows? If 24 percent is the discount rate, what is the present value of the cash flows? a. If 12 percent is the discount rate, the present value of the annuity due is $ b. If 24 percent is the discount rate, the present value of the annuity due is $ II (Round to the nearest cent.) (Round to the nearest cent.)
(Related to Checkpoint 6.2) (Present value of annuity payments) The state lottery's million-dollar payout provides for $1 million to be paid in 25 installments of $40,000 per payment. The first $40,000 payment is made immediately, and the 24 remaining $40,000 payments occur at the end of each of the next 24 years. If 12 percent is the discount rate, what is the present value of this stream of cash flows? If 24 percent is the discount rate, what is the present value of the cash flows? a. If 12 percent is the discount rate, the present value of the annuity due is $ b. If 24 percent is the discount rate, the present value of the annuity due is $ II (Round to the nearest cent.) (Round to the nearest cent.)
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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Transcribed Image Text:(Related to Checkpoint 6.2) (Present value of annuity payments) The state lottery's million-dollar payout provides for $1 million to be paid in 25 installments of $40,000
per payment. The first $40,000 payment is made immediately, and the 24 remaining $40,000 payments occur at the end of each of the next 24 years. If 12 percent is the
discount rate, what is the present value of this stream of cash flows? If 24 percent is the discount rate, what is the present value of the cash flows?
a. If 12 percent is the discount rate, the present value of the annuity due is $
b. If 24 percent is the discount rate, the present value of the annuity due is $
***
(Round to the nearest cent.)
(Round to the nearest cent.)
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