Daniel has just won the Flyball Lottery. Ha has two options for receiving his prize. The first option is to accept a $134,000 cashpayment today. The second option is to receive $23,400 at the end of sach of the next 19 years and a $27,300 lump sum payment inthe 20th year. Daniel can invest money ata 10% rate.Click hare to view the factor table.(a) Calculate the present value of the two options. (For calculation purposes, use 4 decimal places as displayed in the factor table providedand round final answer to O decimal place, eg. 58,971)Option 1Option 2Present valusWhich option should Daniel choose to receive his winnings?(b) IF Daniel could invest money at 13%, calculats the present valus of the two options. (For calculation purposes, use 4 decimal places asdisplayed in the factor table provided and round final answer to O decimal place, eg 58,971)Option 1Option 2Present valusWhich option should he choosa?

Answer a) Calculation of Present value if amount can be reinvested at 10% Option -1 Since the amount…

Answered: Daniel has just won the Flyball…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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