Assume that you won $400 million in the mega million lottery. How much have you really won? In answering this question, consider the concept of the time value of money. Can you write down how much you have won in an equation if you go for the lump sum payout over 20 years?
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Q7) Assume that you won $400 million in the mega million lottery. How much have you really won? In answering this question, consider the concept of the time value of money. Can you write down how much you have won in an equation if you go for the lump sum payout over 20 years?
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- First, if I were to offer you $5,000 today or $10,000 10 years from now, which would you take based on the time value of money? Or would you need some additional information in order to answer that question? If so, what information would you like to have?A3ai Use the present value and future value formulas to solve the following problems. Confirm your answers with your financial calculator. Show both methods of calculation in your answers. When performing your calculations, keep as many decimal places as you can for intermediate answers, but round your final answers to two decimal places. (10 marks total) If you invest $1000 today at 3% annual interest rate, how much money would you have in one year’s time?Suppose that you are planning to buy a boat in in 28 years [cell B3] for $100,000 [cell B2], and you deposit into your account the amount of $26,000 CAD [cell B1]. (a) What average annually compounding rate of return (as a percentage, correct to 2 decimals) should you earn so you can accumulate the lump sum needed to achieve your goal [cell B5]? Use the RATE function.(Note: You might have to modify the format of cell B5 so that it shows 2 decimals.) (b) What is the correct formula (using 18 characters or less) that should be placed in cell B5?Note: There are to be NO numbers in the function call (apart from a 0 if appropriate), only cell references, or negative cell references where appropriate. In excel pls.
- You see on TV that the Mega Millions is up to $2 million! You decide to buy a ticket ......... and you WIN!!! Unfortunately, you do not get that amount right away. Instead, this is the future value of an annuity. Let us examine some choices you have regarding your big win. a) You could choose to collect your winnings today, in the present day. The lottery people could invest this present value and earn 2.7% interest, compounded annually, and have the $2 million in 25 years. How much would they give you today? b) The interest rate in part (a) is very conservative. You have a “friend” who advises you to take the money today and invest it with him, at 6.6% compounded quarterly, for those 25 years. How much would you have in 25 years if you did this? (What is the future value of the amount you computed in part (a)?) c) Otherwise, you could choose to take the annuity. They will pay you nothing in the present day but will pay you A dollars each month for 25 years. Assume 2.7% interest…A3aii Use the present value and future value formulas to solve the following problems. Confirm your answers with your financial calculator. Show both methods of calculation in your answers. When performing your calculations, keep as many decimal places as you can for intermediate answers, but round your final answers to two decimal places. (10 marks total) If you invest $1000 today at 3% annual interest rate, how much money would you have in 10 years’ time?d. If, instead, you decide to withdraw $170000 per year in retirement (again with the first withdrawal one year after retiring), how many years will it take until you exhaust your savings? (Use trial-and-error, a financial calculator: solve for "N", or Excel: function NPER) e. Assuming the most you can afford to save is $1500 per year, but you want to retire with 1000000 in your investment account, how high of a return do you need to earn on your investments? (Use trial-and-error, a financial calculator: solve for the interest rate, or Excel: function RATE) *round to two decimal places for d) and e)*
- 02a) Why is wealth maximization considered as a better measure than profit maximization? b) You are going to deposit in saving account Tk. 3,00,000 today. You will receive Tk.4,80,000 from the bank at the end of year 7. What will be the rate of interest of yourdeposit? c) Mr. Kobir has been offered to deposit of Tk. 10000 today with an interest rate of 12%.Calculate the value on this opportunity after 5 years, if the interest rate is:(i) Compounded Semi-Annually.(ii) Compounded Monthly. d) Gabrielle just won Tk. 10,00,000 in the state lottery. She is given the option of receivingeither alternative A or B shown in the following table at the end of each of the next 5years. She decides to choose the payment alternative—annuity or the mixed stream ofpayments— that provides the higher future value at the end of 5 years. If Gabrielle canearn 5% annually on her investments, which option should she take? End of year Cash flow stream…you have just won the lottery and will receive $460,000 in one year. you will receive payments for 21 years, and the payments will increase 4 percent per year. if the appropriate discount rate is 11 percent, what is the present value of your winnings? Please explain how to solve using the financial calculator to show and explain steps thanks5. Use the calculator and Excel to answer the following: a. You want to become a millionaire (reaching 1 million dollars!). You want to know how long it will take you to get there if you plan on saving $1,250 monthly, and the current annual rate is 1296. (It will take you less than you think...!) i. Formula n = log (FV/PV) / log (1 + r) ii. Estimate it in your Calculator: Write the keys you enter iii. Excel: Write the formula and arguments in Excel format. b. Your grandfather gave you $25,000 as a graduation gift. If you invest that money earning 9% per year, how much will you have in 10 years? iv. Formula: Plug in the values in the formula v. Calculator: Write the keys you enter vi. Excel: Write the formula and arguments in Excel format. c. What would you pay today for a piece of paper that promises you to get $67,000 in 12 years if the current discount rate is 9 percent? vii. Formula: viii. Calculator: Write the keys you enter ix. Excel: Write the formula and arguments in Excel…
- 1. Select one of the following questions to answer: If I invest $1000 at 3% interest, how long will take for my money to double? If I invest $1000 at 6% interest, how long will take for my money to double? If I invest $1000 at 8% interest, how long will take for my money to double? If I invest $1000 at 12% interest, how long will take for my money to double?3. Suppose you want to have € 0.5 million saved by the time you reach age 30 and suppose that you are 20 years old today. If you can earn 5% (compounding yearly) on your funds, how much would you have to invest today to reach your goal? manually using TVM functions FV Interest rate Time period Compounding frequency Total number of compounding periods Present value of money Present value of money (EUR) (as a decimal) (number of years) (times per year) (EUR) (EUR) 5,000,000 0.05 10 1 10 306,956.63 306,956.63The $45 million lottery prize that you have just won actually pays out $4.5 million a year for 20 years. The interest rate is 12.0%. a. If the first payment comes after 1 year, what is the present value of your winnings? Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. b. What is the present value if the first payment comes immediately? Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. a. Present value b. Present value milion milion