This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Randy W. recently won the Western States Lottery of 6,500,000. The lottery pays either a total of ... (Read 373 times)

LaDunn

  • Hero Member
  • *****
  • Posts: 526
on: Jul 10, 2018
Randy W. recently won the Western States Lottery of 6,500,000. The lottery pays either a total of twenty 325,000 payments per year with the first payment today (i.e., an annuity due), or 3,500,000 today.
 
  At what interest rate would Randy be financially indifferent between these two payout choices?
  A) 5.37
  B) 7.36
  C) 7.76
  D) 8.00

Question 2

SteelCo Production, Inc is considering the use of a lock-box collection system. SteelCo's average
  check receipt is 1,350. The company invests excess cash in money-market certificates and receives
  an average of 3.5 annual interest.
 
  The lock-box system will speed up SteelCo's collections by 2.5
  days. What is the maximum per check processing cost that SteelCo should be willing to pay for the
  lock-box system?
  A) 0.4519 B) 0.2987 C) 0.3236 D) 0.1871


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

akudia

  • Sr. Member
  • ****
  • Posts: 347
Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: C
Explanation: C) This is an iterative process (trial and error). Solve using the RATE function in Excel.
MODE = BEGIN
INPUT 20 ? -3,500,000 325,000 0
KEY N I/Y PV PMT FV
CPT 7.76

Answer to Question 2

C


LaDunn

  • Member
  • Posts: 526
Reply 2 on: Jul 10, 2018
Wow, this really help

Animal_Goddess

  • Member
  • Posts: 339
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

« previous next »
 

Did you know?

Drying your hands with a paper towel will reduce the bacterial count on your hands by 45–60%.

Did you know?

To combat osteoporosis, changes in lifestyle and diet are recommended. At-risk patients should include 1,200 to 1,500 mg of calcium daily either via dietary means or with supplements.

Did you know?

If all the neurons in the human body were lined up, they would stretch more than 600 miles.

Did you know?

The Food and Drug Administration has approved Risperdal, an adult antipsychotic drug, for the symptomatic treatment of irritability in children and adolescents with autism. The approval is the first for the use of a drug to treat behaviors associated with autism in children. These behaviors are included under the general heading of irritability and include aggression, deliberate self-injury, and temper tantrums.

Did you know?

Patients who have undergone chemotherapy for the treatment of cancer often complain of a lack of mental focus; memory loss; and a general diminution in abilities such as multitasking, attention span, and general mental agility.

The effective temperature, or black body temperature, of the Sun (5777 K) is the temperature a black The effective temperature, or black body temperature, of the Sun (5777 K) is the temperature a black
Prevalence of Diabetes in the United States Based on Age and Sex Data from the American Diabetes ... Prevalence of Diabetes in the United States Based on Age and Sex Data from the American Diabetes ...
One of the cultural privileges of being white in the United States is less suspicion of wrongdoing. One of the cultural privileges of being white in the United States is less suspicion of wrongdoing.
Find the lateral area, total surface area, and volume of the frustum Find the lateral area, total surface area, and volume of the frustum
Examples of low and high Entropy states Examples of low and high Entropy states
Total allowable and actual catch, Grand Bank Atlantic Cod 1959 -2012 Total allowable and actual catch, Grand Bank Atlantic Cod 1959 -2012
Video: Angiotensin II - kidneys, adrenal glands and dehydration

For a complete list of videos, visit our video library