IM0096%24LLI3DECISION TIME – LUMP SUM OR PAYMENTSTATWould you rather take a lump sum of $372 million or 30 annual payments of $25million if the current interest rate is 6%?• Use the present value equation to calculate the present value of the $750 million in 30 annualinstallments, given the interest rate of 6% to answer this question.= Ad(? + I) I=}916)12A11)114prt sc144deletehomeendan 6d4.->backspacelockhomeH.enterpause1 shiftpuealtctrlSU IMINR▪ Now that you made your decision, whatwill you do with your money?no.-Explain in detail your first threemoney moves you would conduct withyour new winnings.· For example - Would you spend it? Save it?What are your opportunity costs of yourpurchases? VWhere would you save itstocks/bonds/mutual funds/real estate?Why? Would you give any money tocharities, how about to family andfriends?)- TNLL NOISIOHOYOUR NEW WEALHTH· Make sure to examine the risk and returnrelationship12SUprt scdeletehome114114144pue%24backspaceunu8.homeenterH.4.5.pause↑ shiftpuactrl

The concept of the time value of money states that the current worth of money is more than its value…

Answered: - Would you rather take a lump sum of…

- Would you rather take a lump sum of $372 million or 30 annual payments of $25 million if fhe current interest rate is 6%?

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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Question

IM
00
96
%24
LLI
3
DECISION TIME – LUMP SUM OR PAYMENTS
TAT
Would you rather take a lump sum of $372 million or 30 annual payments of $25
million if the current interest rate is 6%?
• Use the present value equation to calculate the present value of the $750 million in 30 annual
installments, given the interest rate of 6% to answer this question.
= Ad
(? + I) I=}
91
6)
12
A
11)
114
prt sc
144
delete
home
end
an 6d
4.
->
backspace
lock
home
H.
enter
pause
1 shift
pue
alt
ctrl
SU

IM
IN
R
▪ Now that you made your decision, what
will you do with your money?
no.
-Explain in detail your first three
money moves you would conduct with
your new winnings.
· For example - Would you spend it? Save it?
What are your opportunity costs of your
purchases? VWhere would you save it
stocks/bonds/mutual funds/real estate?
Why? Would you give any money to
charities, how about to family and
friends?)
- TNLL NOISIOHO
YOUR NEW WEALHTH
· Make sure to examine the risk and return
relationship
12
SU
prt sc
delete
home
114
114
144
pue
%24
backspace
unu
8.
home
enter
H.
4.
5.
pause
↑ shift
pua
ctrl

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