Question
In: Finance
A state lottery commission pays the winner of the Million Dollar lottery 20 installments of $50,000/year....
A state lottery commission pays the winner of the Million Dollar lottery 20 installments of $50,000/year. The commission makes the first payment of $50,000 immediately and the other n = 19 payments at the end of each of the next 19 years. Determine how much money the commission should have in the bank initially to guarantee the payments, assuming that the balance on deposit with the bank earns interest at the rate of 5%/year compounded yearly. Hint: Find the present value of the annuity. (Round your answer to the nearest cent.)
Solutions
jeff jeffy answered 2 years agoRelated Solutions
A state lottery commission pays the winner of the Million Dollar lottery 20 installments of $50,000/year....
A state lottery commission pays the winner of the Million Dollar
lottery 20 installments of $50,000/year. The commission makes the
first payment of $50,000 immediately and the other n = 19
payments at the end of each of the next 19 years. Determine how
much money the commission should have in the bank initially to
guarantee the payments, assuming that the balance on deposit with
the bank earns interest at the rate of 4%/year compounded yearly.
Hint: Find the present...
The state lottery's million-dollar payout provides for $11 million to be paid in 20 installments of...
The state lottery's million-dollar payout provides for $11
million to be paid in 20 installments of 50,000 per payment. The
first 50,000 payment is made immediately, and the
19 remaining 50,000 payments occur at the end of each of the
next 19 years. If 7 percent is the discount rate, what is the
present value of this stream of cash flows? If
14 percent is the discount rate, what is the present value of
the cash flows?
a. If 7...
a.The state lottery's million-dollar payout provides for $1.2 million to be paid in 20 installments of...
a.The state lottery's million-dollar payout provides for $1.2
million to be paid in 20 installments of $60,000 per payment.The
first $60,000 payment is made immediately, and the 19 remaining
$60,000 payments occur at the end of each of the next 19 years. If
11 percent is the discount rate, what is the present value of this
stream of cash flows? If 22 percent is the discount rate, what is
the present value of the cash flows? if percent is the...
John wins $1,00,000 in a lottery and will be paid 20 equal installments of $50,000 with...
John wins $1,00,000 in a lottery and will be paid 20 equal
installments of $50,000 with the first payment due today. A banker
offers to exchange John’s winnings for a perpetuity of $ X per
month with the first payment due today. Find the value closest to $
X assuming a 10% effective rate of interest.
(A) $3,330 (B) $3,360 (C) $3,550 (D) $3,700 (E) $3,730
I'd appreciate it if you could let me know.
1. Assume I won 50 million dollars in a lottery that pays installments of 10 million...
1. Assume I won 50 million dollars in a lottery that pays
installments of 10 million dollars a year for five years or a lump
sum of less than 50 million dollars. If I take the installments, my
first installment would come the day I claimed my winnings at the
state lottery office. If I take the lump sum, I would receive that
payment the day I claimed my winnings at the state lottery office.
Assume that the interest rate...
1. Assume I won 5 million dollars in a lottery that pays installments of 1 million...
1. Assume I won 5 million dollars in a lottery that pays
installments of 1 million dollars a year for five years or a lump
sum of less than 5 million dollars. If I take the installments, my
first installment would come the day I claimed my winnings at the
state lottery office. If I take the lump sum, I would receive that
payment the day I claimed my winnings at the state lottery office.
Assume that the interest rate...
The state lottery's million-dollar payout provides for $1.4 million to be paid in 25 installments of...
The state lottery's million-dollar payout provides for $1.4
million to be paid in 25 installments of $56,000 per payment. The
first $56,000 payment is made immediately, and the 24 remaining
$56,000 payments occur at the end of each of the next 24
years.
If 6 percent is the discount rate, what is the present value of
this stream of cash flows?
If 12 percent is the discount rate, what is the present value
of the cash flows?
Assignment Eight 1. Assume I won 5 million dollars in a lottery that pays installments of...
Assignment Eight 1. Assume I won 5 million dollars in a lottery
that pays installments of 1 million dollars a year for five years
or a lump sum of less than 5 million dollars. If I take the
installments, my first installment would come the day I claimed my
winnings at the state lottery office. If I take the lump sum, I
would receive that payment the day I claimed my winnings at the
state lottery office. Assume that the...
The state lottery claims that its grand prize is $2 million. The lucky winner will receive...
The state lottery claims that its grand prize is $2 million.
The lucky winner will receive $200,000 upon presentation of the
winning ticket plus $200,000 at the end of each year for the next
19 years. Assume your own discount rate.
a-Why isn't this really a
million-dollar prize? (5 Points)
b-What would it actually be worth in
dollars to you? (5 Points)
c-What would the 20 yearly payments
need to be for the present value of the lottery to be...
The gaming commission is introducing a new lottery game called Infinite Progresso. The winner of the...
The gaming commission is introducing a new lottery game called
Infinite Progresso. The winner of the Infinite Progresso jackpot
will receive $1,100 at the end of January, $2,400 at the end of
February, $3,700 at the end of March, and so on up to $15,400 at
the end of December. At the beginning of the next year, the
sequence repeats starting at $1,100 in January and ending at
$15,400 in December. This annual sequence of payments repeats
indefinitely. If the...
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