50.1K

Verified Solution

Link Copied!

Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: $(1)$ $$74,000$ cash immediately, $(2)$ $$26,000$ cash immediately and a six$-$period annuity of $$8,300$ beginning one year from today, or $(3)$ a six$-$period annuity of $$15,000$ beginning one year from today. $($FV of $$1,$ PV of $$1,$ FVA of $$1,$ PVA of $$1,$ FVAD of $$1$ and PVAD of $$1)($Use appropriate factor$($s$)$ from the tables provided.$)$

Assuming an interest rate of $6\%,$ determine the present value for the above options. Which option should Alex choose?

The Weimer Corporation wants to accumulate a sum of money to repay certain debts due on December $31,2030.$ Weimer will make annual deposits of $$140,000$ into a special bank account at the end of each of $10$ years beginning December $31,2021.$ Assuming that the bank account pays $7\%$ interest compounded annually, what will be the fund balance after the last payment is made on December $31,2030?$

Complete this question by entering your answers in the tabs below.

Required $1$

Assuming an interest rate of $6\%,$ determine the present value for the above options. Which option should Alex choose? $($Round your final answers to nearest whole dollar amount.$)$

$\backslash$table$[[,$Annuity Payment,PV Annuity,,$\backslash$table$[[$Immediate$],[$Cash$]],,$PV Option$],[$Option $1,,,+,,=,$$$,0],[$Option $2,,,+,,=,$$$,0],[$Option $3,,,+,,=,$$$,0],[$Which opti,ould Alex choose?,,,,,,$]]$

Answer & Explanation Solved by verified expert

See Answer