Author Question: You just won a lotteryCONGRATULATIONS Your parents have always told you to plan for the future, so ... (Read 51 times)

RRMR · **on:** Jul 10, 2018

You just won a lotteryCONGRATULATI ONS Your parents have always told you to plan for the future, so since you already have a well-paying job you decide to invest rather than spend your lottery winnings.

The payment schedule from the lottery commission is 100,000 after taxes at the end of year one and 19 more payments of exactly 100,000 after taxes in equal annual end-of-the-year deposits (i.e., 20 deposits of 100,000 each, the first deposit is one year from today) into your account paying 7 compounded annually. How much money will be in your account after the last deposit is made?
A) 2,000,000.00
B) 3,637,896.48
C) 4,099,549.23
D) 4,486,517.68

Question 2

A/An ________ is a series of equal end-of-the-period cash flows.

A) ordinary annuity
B) annuity due
C) perpetuity due
D) None of the above

meganlapinski · **Reply #1 on:** Jul 10, 2018

Answer to Question 1

Answer: C
Explanation: C) FV = PMT = 100,000 = 4,099,549.23.
MODE = END
INPUT 20 7 0 -100,000 ?
KEY N I/Y PV PMT FV
CPT 4,099,549.23

Answer to Question 2

Answer: A