1. Suppose that you will receive annual payments of $27,400 for a period of 20 years....

1. Suppose that you will receive annual payments of $27,400 for a period of 20 years. The first payment will be made 6 years from now. If the interest rate is 8.00%, what is the value of the annuity in year 5, what is the current value of this stream of cash flows? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

a) Value of security in year 5?

b) Value of security today?

2. The $70.0 lottery payment that you just won actually pays $2.8 million per year for 25 years. If the discount rate is 8.50% and the first payment comes in one year

a) What is the present value of the winnings? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

b) What is the present value of the winnings, if the first payment comes immediately? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

Expert Solution

jeff jeffy answered 1 year ago

1.Suppose that you will receive annual payments of $14,000 for a period of 10 years. The...

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