You just won the $87 million Ultimate Lotto jackpot. Your
winnings will be paid as $2,900,000...
You just won the $87 million Ultimate Lotto jackpot. Your
winnings will be paid as $2,900,000 per year for the next 30 years.
If the appropriate interest rate is 6.2 percent, what is the value
of your windfall?
You just won the $55 million
Ultimate Lotto jackpot. Your winnings will be paid as $2,200,000
per year for the next 25 years. If the appropriate interest rate is
5.5 percent, what is the value of your windfall?
$30,494,340.24
$31,133,737.70
$29,510,651.84
$28,933,737.70
$28,035,119.25
ou just won the $62.5 million Ultimate Lotto jackpot. Your
winnings will be paid as $2,500,000 per year for the next 25 years.
If the appropriate interest rate is 5.8 percent, what is the value
of your windfall?
$34,464,197.27
$31,964,197.27
$32,574,855.64
$33,660,684.16
$30,946,112.86
John just won the lotto Jackpot of $25,000,000; based on the
rules however John has the option of either accepting a lump sum
payment of $17,000,000 or collect 2,500,000 annually for the next
10 years. John heard that you are an ‘A’ student in Financial
Management and came to you for advice. How would you advise John?
What factors would you need to take into consideration to properly
advise John?
John just won the lotto Jackpot of $25,000,000; based on the
rules however John has the option of either accepting a lump sum
payment of $17,000,000 or collect 2,500,000 annually for the next
10 years. John heard that you are an ‘A’ student in Financial
Management and came to you for advice. How would you advise John?
What factors would you need to take into consideration to properly
advise John?
You've won the lotto jackpot of $1,000,000. They wnt to pay it
to you at $50,000 a year for 20 years. You ask them what kind of
discount rate they would use if you wanted a lump sum today instead
and tell you 6%. What would your lump sum payment be?
Suppose you won the lottery but not all of your winnings will
come in one year. Instead, you will get a series of annual payments
over the next five years. The table below tells you what your
payment will be every year for the next five years. Use the
information in the table to make the following computations:
The present and future value of your lottery ticket if the
interest rate is 8%
The present and future value of your...
Phred Phortunate won his state lotto 2 years ago. His lotto
ticket was worth $10 million, which was payable in 20 annual
installments of $500,000 each. Phred paid $1 for the winning
ticket. The lotto in Phred's state does not allow winners to
receive their payout in a lump sum. Phred wanted all the money now,
so he assigned his future lotto winnings to an Unscrupulous Finance
Company (UFC) for a discounted price of $4.5 million. Assignment of
lotto winnings...
You just won your state lottery and will be receiving a check
for $1 million. You have always wanted to start your own food truck
business A new food truck with kitchen and other related equipment
costs about $100,000. Other fixed costs including salaries, gas for
the truck, licensing fees are estimated to be about $50,000 per
year. You decided to offer traditional Mediterranean cuisine.
Variable costs include food and beverages estimated at $6 per
platter (meat, rice, vegetable and...
Recently, a
lucky person won the lottery. The lottery winnings were reported to
be $85.5 million. In reality, the winner got a choice of $2.85
million per year for 30 years or $46 million today.
a) Explain
briefly why winning $2.85 million per year for 30 years is not
equivalent to winning $85.5 million. You may use simple
calculations (with assumptions such as an interest rate of 3% p.a.)
to explain your answer.
b) The
evening news interviewed a group...
1.
Suppose you won $2 million in a lottery and it is to be paid
in 25 equal annual installments starting today. An alternative to
the installment plan is to receive a lump sum payment today. If the
applicable discount rate was 7% per year, how large would the lump
sum payment have to be? Round to the nearest cent.
2.
If you invest $86 per month (starting next month) every month
for 38 years, and you can earn 10%...