1. Wally Beaver won a lottery and will receive a check for $2,500 at the beginning...

1. Wally Beaver won a lottery and will receive a check for $2,500 at the beginning of each 6 months for the next 6 years. If Wally deposits each check into an account that pays 6%, how much will he have at the end of the 6 years?

2. Today Arrow Company issued bonds that will mature to a value of $120,000 in 20 years. Arrow’s controller is planning to set up a sinking fund. Interest rates are 6% compounded semiannually. What will Arrow Company have to set aside to meet its obligation in 10 years? Check your answer. Your answer will be off due to rounding of Table 13.3.

Expert Solution

jeff jeffy answered 2 years ago

You just won the lottery and will receive $14,000 at the end of each of the...

You just won the lottery and will receive $14,000 at the end of each of the next 10 years. Your friend offers to give you a flat $100,000 for the 10 years' worth of income flows right now. If you expect a return of 7% on any surefire investment, how much do you think these lottery winnings are worth to you today? (FORMAT: XX,XXX.XX DO NOT INCLUDE A DOLLAR SIGN)

You have just won the lottery and will receive $500,000 in one year. You will receive...

You have just won the lottery and will receive $500,000 in one year. You will receive payments for 25 years, and the payments will increase 4 percent per year. If the appropriate discount rate is 11 percent, what is the present value of your winnings? 5,511,586 $29,258,112 $36,804 $29,258,112 $5,741,235

You have just won the lottery and will receive $1,500,000 in one year. You will receive...

You have just won the lottery and will receive $1,500,000 in one year. You will receive payments for 30 years, and the payments will increase by 2.5 percent per year. If the appropriate discount rate is 7 percent, what is the present value of your winnings?

You have just won the lottery and will receive $610,000 in one year. You will receive...

You have just won the lottery and will receive $610,000 in one year. You will receive payments for 19 years, which will increase 5 percent per year. The appropriate discount rate is 12 percent. Required: What is the present value of your winnings?

You just won your state lottery and will be receiving a check for $1 million. You...

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...

1. You have won the lottery and will receive $20,000 each year for the next 20...

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Alysha has just won a lottery. She will receive a payment of $8,000 at the end...

Alysha has just won a lottery. She will receive a payment of $8,000 at the end of each year for 9 years. As an alternative, she can choose an immediate payment of $55,000. A. Which alternative should she pick if the interest rate is 4 percent: make a payment at the end of each year or an immediate payment? (choose) B. What would the interest rate have to be for Alysha to be indifferent about the two alternatives? (Round answer...

Alysha has just won a lottery. She will receive a payment of$8,000 at the end...

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Winnie Winalot has won the Set for Life lottery and will receive a payment of $77,326.76...

Winnie Winalot has won the Set for Life lottery and will receive a payment of $77,326.76 every year, starting today, for the next 20 years. If Winnie invests the proceeds at a rate of 7.84 percent per annum, what will be the present value of the cash flows she will receive?

9. You have won the lottery and will receive $20,000 each year for the next 20...

9. You have won the lottery and will receive $20,000 each year for the next 20 years! A financial services company has offered you an upfront payment of $200,000 for the entire income stream. If you estimate the time value of money for you is 5%, would you accept the offer? Explain.

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