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Time Value of money (TVM)

Provide your response for the following problems: You discover an antique in your attic that you purchased at an 8 estate sale 10 years ago for $400, You auction it on Ebay and receive $8,000 for your item. What annual rate of return did you earn? You have just purchased a share of preferred stock for $55.39. The preferred stock pays an annual dividend of $5.50 per share forever. What is the rate of return on your investment? Congratulations! You are the proud winner of the multi-state Sour Ball Lottery, You are to receive $2,192,539 at the end of each year for the next 20 years. While the Lottery Commission refers to this as an over $40 million jackpot, if you choose the "cash option" they will give you much less than that; you can recelve a lump sum payment today equal to the present value of the ordinary annuity instead of the 20 annual payments. If the discount rate that the Lottery Commission uses to determine the lump sum payoff is 7%, what is your payoff if you select the cash option? A retirement plan guarantees to pay you or your estate a fixed amount for 25 years. At the time of retirement you will have $192,539 to your credit in the plan. The plan anticipates earning 7% interest annually over the period you receive benefits.' How much will your annual benefits be assuming the first payment occurs one year from your retirement date

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