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Author Question: You just won the Publisher's Clearing House Sweepstakes and the right to 20 after-tax ordinary ... (Read 70 times)

jazziefee

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  • Posts: 505
on: Jul 10, 2018
You just won the Publisher's Clearing House Sweepstakes and the right to 20 after-tax ordinary annuity cash flows of 163,291.18. Assuming a discount rate of 7.50, what is the present value of your lottery winnings?
 
  Use a calculator to determine your answer.
  A) 3,265,823.60
  B) 1,789,520.81
  C) 1,664,670.52
  D) There is not enough information to answer this question.

Question 2

Which of the following parity conditions is (are) correct?
 
  A) The purchasing-power parity theory states that in the long run exchange rate changes tend to
  reflect international differences in inflation rates.
  B) The interest-rate parity theory states that the forward premium/discount should be equal and
  opposite in size to the national interest rate differential.
  C) The international Fisher effect states that national interest rate differentials are the result of
  inflation differentials.
  D) All of the above are correct.


kkenney

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  • Posts: 352
Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: C
Explanation: C) MODE = END
INPUT 20 7.5 ? 163,291.18 0
KEY N I/Y PV PMT FV
CPT 1,664,670.52

Answer to Question 2

D


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