Author Question: What is the present value of a lottery paid as an annuity due for twenty years if the cash flows are ... (Read 95 times)

oliviahorn72

  • Hero Member
  • *****
  • Posts: 579
What is the present value of a lottery paid as an annuity due for twenty years if the cash flows are 250,000 per year and the appropriate discount rate is 7.50?
 
  A) 5,000,000.00
  B) 3,186,045.39
  C) 2,739,769.55
  D) 2,548,622.84

Question 2

A wealthy woman just died and left her pet cats the following estate: 50,000 per year for the next 15 years with the first cash flow today. At a discount rate of 3.2, what is the feline estate worth in today's dollars?
 
  A) 588,352.84
  B) 607,180.14
  C) 750,000.00
  D) 774,000.00



Tabitha_2016

  • Sr. Member
  • ****
  • Posts: 344
Answer to Question 1

Answer: C
Explanation: C)
PV = PMT   (1 + r)1
= 250,000   (1.075)1 = 2,739,769.55.

MODE = BEGIN
INPUT 20 7.5 ? -250,000 0
KEY N I/Y PV PMT FV
CPT 2,739,769.55

Answer to Question 2

Answer: B
Explanation: B)
PV = PMT   (1 + r)1
= 50,000   (1.032)1 = 607,180.14.

MODE = BEGIN
INPUT 15 3.2 ? -50,000 0
KEY N I/Y PV PMT FV
CPT 607,180.14



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question


 

Did you know?

Medications that are definitely not safe to take when breastfeeding include radioactive drugs, antimetabolites, some cancer (chemotherapy) agents, bromocriptine, ergotamine, methotrexate, and cyclosporine.

Did you know?

Asthma cases in Americans are about 75% higher today than they were in 1980.

Did you know?

Acetaminophen (Tylenol) in overdose can seriously damage the liver. It should never be taken by people who use alcohol heavily; it can result in severe liver damage and even a condition requiring a liver transplant.

Did you know?

The average person is easily confused by the terms pharmaceutics and pharmacology, thinking they are one and the same. Whereas pharmaceutics is the science of preparing and dispensing drugs (otherwise known as the science of pharmacy), pharmacology is the study of medications.

Did you know?

All adverse reactions are commonly charted in red ink in the patient's record and usually are noted on the front of the chart. Failure to follow correct documentation procedures may result in malpractice lawsuits.

For a complete list of videos, visit our video library