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 325 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
Excellent

JCABRERA33

  • Member
  • Posts: 344
Reply 3 on: Yesterday
:D TYSM

« previous next »
 

Did you know?

Children of people with alcoholism are more inclined to drink alcohol or use hard drugs. In fact, they are 400 times more likely to use hard drugs than those who do not have a family history of alcohol addiction.

Did you know?

When Gabriel Fahrenheit invented the first mercury thermometer, he called "zero degrees" the lowest temperature he was able to attain with a mixture of ice and salt. For the upper point of his scale, he used 96°, which he measured as normal human body temperature (we know it to be 98.6° today because of more accurate thermometers).

Did you know?

A seasonal flu vaccine is the best way to reduce the chances you will get seasonal influenza and spread it to others.

Did you know?

The shortest mature adult human of whom there is independent evidence was Gul Mohammed in India. In 1990, he was measured in New Delhi and stood 22.5 inches tall.

Did you know?

The Centers for Disease Control and Prevention (CDC) was originally known as the Communicable Disease Center, which was formed to fight malaria. It was originally headquartered in Atlanta, Georgia, since the Southern states faced the worst threat from malaria.

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.
Globalization Within the United States Globalization Within the United States
Relationship between Income and Happiness in the United States Relationship between Income and Happiness in the United States
A company purchased 26 desks for $240 each and 18 chairs for $59 each. Compute the total ... A company purchased 26 desks for $240 each and 18 chairs for $59 each. Compute the total ...
Applying the bill of rights to the states Applying the bill of rights to the states
Recently discovered members of the deep pelagic community Recently discovered members of the deep pelagic community
Video: Endocytosis -Types and Phagocytosis

For a complete list of videos, visit our video library