Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. 1. suppose you won $2 million in a lottery and it

1. Suppose you won $2 million in a lottery and it is to be paid in 25...

80.2K

Verified Solution

Question

Finance

1.
Suppose you won $2 million in a lottery and it is to be paidin 25 equal annual installments starting today. An alternative tothe installment plan is to receive a lump sum payment today. If theapplicable discount rate was 7% per year, how large would the lumpsum payment have to be? Round to the nearest cent.

2.
If you invest $86 per month (starting next month) every monthfor 38 years, and you can earn 10% per year (compounded monthly),how much will you have at the end of 38 years? Round to the nearestcent.

Answer & Explanation Solved by verified expert
4.2 Ratings (755 Votes)
1 If 2 million is to be paid in 25 equal annual instalment each instalment would be 80000 being 2 million 25 months The present value of annuity for 24 years I take 24 instead of 25 because the first instalment will be given NOW and hence no need to apply discount at    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Jolie Foster Care Homes Inc. shows the following data:    Year Net Income Total Assets Stockholders' Equity Total Debt 20X1 $ 155,000 $ 2,390,000 $ 761,000 $ 1,629,000 20X2 191,000 2,700,000 966,000 1,734,000 20X3 208,000 2,730,000 1,770,000 960,000 20X4 192,000 2,470,000 2,220,000 250,000 compute the ratio of net...

Finance
Q

Answer the following question in 250 words:Describe the core, actual, and augmented product of NISSAN LEAF?

General Management
Q

A gas undergoes a cyclic process ABCDA as shown in the figure The part ABC...

Physics
Q

A firework is shot straight up into the air with an initial velocity of 500...

Statistics
Q

Evaluate 7 7 Sx x 36 6 x x 36 dx dx 2197 6

Calculus
Q

You are to prepare a retirement plan for yourself taking the following things into consideration:...

Accounting
Q

Jamesway Corporation makes two types of replacement fittings...

Accounting
Q

I need help Sheridan Company obtained land by issuing 2,540 shares of its $10...

Accounting
Q

Hickory Company manufactures two products13,000 units of Product Y and 5,000 units of Product Z....

Accounting
Q

Following information relates to Sanchez Co. ...

Accounting
Q

Describe three challenges you think payroll accountants face in their job responsibilities. Also, if you...

Accounting
Q

You are a shareholder in a C corporation. The corporation earns $ 1.88 per share...

Finance