Suppose you just won the state lottery, and you have a choice between receiving $4,500,000 today or a 20-year annuity of $250,000, with the first payment coming one year from today. What rate of return is built into the annuity? Disregard taxes.   a. 1.03%     b. 0.13%     c. -0.77%     d. 2.83%     e. 1.93%

Q: Suppose you just won the state lottery, and you have a choice between receiving $3,550,000 today or…

A: Choice-1 Amount to receive today is $3,550,000 Choice -2 Annuity amount is $250,000 Time period is…

Q: Suppose you just won the state lottery, and you have a choice between receiving $2,825,000 today or…

A: Present value = pv = $2,825,000 Time = nper = 20 years Payment = pmt = $240,000

Q: ou won the lottery! You are considering whether or not to accept a lump sum amount or an annual…

A: Annual cash inflow (P) = $ 91,873 Discount rate (r) = 6% Number of annual deposits (n) = 12

Q: Mary is going to receive a 32-year annuity of $9,700 per year. Nancy is going to receive a…

A: We need to use the present value of the ordinary annuity formula to calculate the present value of…

Q: What is the dollar difference (on an absolute basis) in the present value of receivin $9,000…

A: Present value illustrates the current value of a sum of money that will be received or paid in the…

Q: Suppose that you won $1,500,000 in the Illinois state lottery. It will be paid to you over 20 years…

A: An annuity is end of year equal payments made for a fixed period of time at a specified interest…

Q: You want to invest in an annuity that will pay you $10,500 per year for the first 4 years and $7,200…

A: The compounding rate of interest is always more beneficial to the investor because it offers more…

Q: you just won the state lottery, and you have a choice between receiving $2,625,000 today or a…

A: Rate of return inbuilt in annuity is rate at which present value of annuity is equals to amount of…

Q: NPV Simes Innovations, Inc., is negotiating to purchase exclusive rights to manufacture and market a…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: An annuity of $1,000 at the end of each year lasts in perpetuity. However, we do not have access to…

A: A perpetuity is an annuity stream of cash flows that continues forever.

Q: Mr. Lucky just won the lottery. He has a choice of $1,000,000 today or a $50,000 semi-annual payment…

A: The concept of time value of money will be used here.Amount today is the present value and…

Q: If $235,000 is deposited now, how much annuity at the end of each year can a person get annually…

A: Deposit amount (D) = $235000 n = 3.5 years r = 8% Let annuity at the end of each year = A

Q: 1.1) You have just won the lottery and will receive $2.5 million in one year. You will receive…

A: As per Bartleby honor code, when multiple questions are asked, the expert is required only to solve…

Q: Incorrect Your answer is incorrect. The Barnes family wants to save money to travel the world. They…

A: Future Value of Ordinary Annuity: It represents the future worth of the annuity payments made at…

Q: What annual payment must you receive in order to earn a 6.5% rate of return on a perpetuity that has…

A: The objective of the question is to find out the annual payment that one must receive to earn a 6.5%…

Q: you would like to have enough money saved to receive a $53,000 per year perpetuity after retirement.…

A: Perpetuity refers to something that lasts forever, without an end.It represents an infinite duration…

Q: If you put up $30,000 today in exchange for a 6.50 percent, 15-year annuity, what will the annual…

A: A series of fixed payments that are paid or received at an equal time interval is term as the…

Q: K (Solving for PMT of an annuity) To pay for your child's education, you wish to have accumulated…

A:

Q: Would you prefer the following:   a. An ordinary annuity where you receive $500 each year for 7…

A: An ordinary annuity is one in which the cash flows occur at the end of each year or each period.…

Q: A new investment opportunity for you is an annuity that pays $1,100 at the beginning of each year…

A: The maximum amount to be paid for annuity can be calculated by discounting future cash inflows at…

Q: 10) An annuity is set up that will pay $1500 per year for ten years. What is the present value (PV)…

A: Solution:- When an equal amount is paid each period, it is called annuity. Present value of annuity…

Q: Assume you receive $240,000 in five years and the annual interest rate is six percent. Factors for a…

A: Time value of money :— According to this concept, value of money in present day is greater than the…

Q: What's the present value of a perpetuity

A: Perpetuity means a series of equal infinite cashflows, that occur at end of each period with…

Q: Consider a growing perpetuity that will pay $100 in one year. Each year after that, you will receive…

A: Perpetuity means a state of being forever, with no end or for an indefinite period of time. Here,…

Q: Suppose you deposit $1,500.00 into and account 7.00 years from today into an account that earns…

A: Future value is an estimated value of a current asset at an assumed growth rate over a certain…

Q: What's the rate of return you would earn if you paid $3,480 for a perpetuity that pays $70 per year?…

A: The objective of this question is to calculate the rate of return on a perpetuity. A perpetuity is…

Q: A company wants to have $50,000 at the beginning of each 6-month period for the next 4 1/2 years. If…

A: Annuity is the regular payment to be made for specific number of years. There are two types of…

Q: A perpetuity pays $85 per year and costs $950. What is the rate of return? 8.95% 9.39% 9.86%…

A: The objective of the question is to calculate the rate of return on a perpetuity. A perpetuity is a…

Q: What is the future value of a 12%, 5-year ordinary annuity that pays $600 each year? Do not round…

A: Ordinary annuity is when the payments start at time 1, Annuity due is when the payments start at…

Q: Your best friend just won the Florida lottery. She has the choice of $15,900,000 today or an annuity…

A: Present value is the current worth of a future sum of money, given a specific interest rate or…

Q: What's the present value of a perpetuity

A: The present value of perpetuity is determined by dividing the amount of regular cash flow by the…

Q: 4) You receive a 30 year annuity that pays $1,250 at the end of each month for the first year, and…

A: Here we have annuity which is to say we will receive periodic payment. In this question our annuity…

Q: If you put up $29,000 today in exchange for a 7.25 percent, 13-year annuity, what will the annual…

A: An annuity refers to a payment series that is provided in exchange for a lump sum payment. It is…

Q: What is the future value of an 8%, 5-year ordinary annuity that pays $350 each year? Do not round…

A: Interest rate (r) = 8% Annual payment (P) = $ 350 Number of annual payments (n) = 5

Q: You are contemplating the purchase of a twenty-four year (variable) annuity that promises cash flows…

A: Compounded Monthly Number of compounding periods = 12 APR = 14.4%

Q: What is the present value of an annuity that pays $58 per year for 13 years and an additional $1,000…

A: PMT = 58 Period = 13 years  Nominal rate of interest = 7.23% Additional amount = 1000

Q: Q. No. 02: Find the future value of the following annuities. The first payment in these annuities is…

A: Using Excel FV Function

Q: You purchase a home for $207,000 that you expect to appreciate 8% in value on an annual basis. How…

A: Future Value = Present Value * (1+r)^nWhere,r = rate of interest per periodn = no. of compounding…

Q: The Sisyphean Company has a bond outstanding with a face value of $5,000 that reaches maturity in…

A: Here,Question 1:ParticularsValuesFace value of the bond (FV) $  5,000.00Current price of the bond…

Q: You are comparing two annuities. Annuity A pays $115 at the end of each year for 5 years. Annuity B…

A: Time, value, and money refer to the money present today being more valuable than the money will…

Q: If you put up $51,000 today in exchange for a 6.25 percent, 15-year annuity, what will the annual…

A: Solution- We know that  PV = PMT [(1-(1+r)^-n)/r] Where PMT= Periodic payment r= rate n= number of…

Q: 3. You won the lottery!  You are considering whether or not to accept a lump sum amount or an annual…

A: Annuity means a series of finite number of payments which are the same in size and made in equal…

Q: (Present value of an annuity due) Determine the present value of an annuity due of $2,000 per year…

A: Present value of annuity due= Pmt*((1-(1+r)^-n)/r) *(1+r)

Q: Assume that you own an annuity that will pay you $14,000 per year for 12 years, with the first…

A: The objective of this question is to find out the rate of return that the uncle would earn on his…

Q: 5. Consider an annuity where you receive $1,000 payments at the end of each year for the next 20…

A: The present value is the present worth of the amount that will be paid or received at future.

Q: You want to establish an annuity that will pay you $14,000 per year for 22 years. If the prevailing…

A: We need to use present value of ordinary annuity formula to calculate amount we need to deposit…