Homework Help is Here – Start Your Trial Now!
Business
Accounting
George has just won the Flyball Lottery. He has two options for rec payment today. The second option is to receive $22,600 at the end. the 20th year. George can invest money at a 7% rate. Click here to view the factor table.

George has just won the Flyball Lottery. He has two options for rec payment today. The second option is to receive $22,600 at the end. the 20th year. George can invest money at a 7% rate. Click here to view the factor table.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Please explain proper steps by Step and Do Not Give Solution In Image Format ? And Fast Answering Please ?

George has just won the Flyball Lottery. He has two options for receiving his prize. The first option is to accept a $126,000 cash payment today. The second option is to receive $22,600 at the end of each of the next 19 years and a $30,800 lump sum payment in the 20th year. George can invest money at a 7% rate. Click here 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 provided and round final answer to O decimal place, e.g. 58,971.) Present value $ Option 2 Which option should George choose to receive his winnings? Present value Option 1 $ Option 2 126000 (b) If George could invest money at 10%, calculate the present value of the two options. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to O decimal place, e.g. 58,971.) Which option should he choose? Option 1 $ 126000 Option 2 241552.32 Option 2 196993.28
Transcribed Image Text:George has just won the Flyball Lottery. He has two options for receiving his prize. The first option is to accept a $126,000 cash payment today. The second option is to receive $22,600 at the end of each of the next 19 years and a $30,800 lump sum payment in the 20th year. George can invest money at a 7% rate. Click here 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 provided and round final answer to O decimal place, e.g. 58,971.) Present value $ Option 2 Which option should George choose to receive his winnings? Present value Option 1 $ Option 2 126000 (b) If George could invest money at 10%, calculate the present value of the two options. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to O decimal place, e.g. 58,971.) Which option should he choose? Option 1 $ 126000 Option 2 241552.32 Option 2 196993.28
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS