won the state lottery and took the payout as a $1,823,475 lump sum today. Your spouse has decided that you need to invest this money for the next 9 years and can expect it to earn an average annual rate of return of 8.00%. If this comes to pass, how much money will be in

won the state lottery and took the payout as a $1,823,475 lump sum today. Your spouse has decided that you need to invest this money for the next 9 years and can expect it to earn an average annual rate of return of 8.00%. If this comes to pass, how much money will be in

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 22P

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Question

You won the state lottery and took the payout as a $1,823,475 lump sum today. Your spouse has decided that you need to invest this money for the next 9 years and can expect it to earn an average annual rate of return of 8.00%. If this comes to pass, how much money will be in the account at the end of the period?

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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