I have a question how does the value of i (interest rate) is 0.075 in the example eventhough it said 9.5% p.a. Is there any calculation involved in geting that 0.075 from 9.5%. Enlighten me if I'm wrong. Thank You.
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Hello. I have a question how does the value of i (interest rate) is 0.075 in the example eventhough it said 9.5% p.a. Is there any calculation involved in geting that 0.075 from 9.5%. Enlighten me if I'm wrong. Thank You.
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- Application: Problem Solving 8.1 Suppose you win a million-dollar lottery and are given a choice between $20,000 a year for 50 years (totaling S1,000,000) or immediate payment of S400,000. Suppose the interest rate is 7 percent. Which would you choose? To make the right choice, you need to calculate the present value of the stream of payments. a. How much is the present value of this million-dollar prize? b. Discuss elaborately your analysis based on your calculations.1. You just won the PA lottery! The lottery offers you a choice: you may choose a lump sum today, or $89 million in 26 equal annual installments at the end of each year. Assume the funds can be invested (yield) at an annual rate of 7.65%. What is the lump sum that would equal the present value of the annual installments? : $89,000,000 $38,163,612 $41,083,128 $13,092,576You are the lucky winner of the Ohio Lottery ! Congratulations. The Lottery tells you that you have won a $20,000,000 prize that will be paid in annual installments of $1,000,000 for 20 years. If interest rates on alternative investments in the market are 8%, what is the actual value (PV) of your prize? Round to the nearest 1,000, and show your work.
- Suppose an investment will pay $7,000 in 44 years from now. If you can earn 6.15% interest compounded monthly by depositing your money in a bank, how much should you pay for the investment today?Round your answer to two decimal places. For example, if your answer is $345.667 round as 345.67 and if your answer is .05718 or 5.718% round as 5.72. Group of answer choicesIf you were the $10,000,000 winner of the Mega-Millions Lottery, which payout option would be the smartest to take financially if you believe you can earn 5.2% annually on an investment? Option A: $333,333.33 every year for 30 years. Option B: $10,000,000 lump sum nowIf you invest $11,000 today, how much will you have in each of the following scenarios? (Click here to see present value and future value tables) A. 10 years at 8% B. 8 years at 12% C. 15 years at 15% D. 18 years at 5%
- Suppose that you won $3,000,000/- in a lottery. You are given the option to take $100,000/- at the end of each year for 30 years or take $1,500,000/- now. If your bank is giving 6% interest on investments. Calculate and decide which option you should takeYou have just won a large lottery prize. The Lottery Company says the prize will be paid to you in 8 instalments of $70000, with the first payment occurring today (beginning of year 1), and subsequent payments occurring at the beginning of each year. If the typical market interest rates suggest that you can invest money and earn an interest rate of 9%, compounded annually, then how much is the lottery actually worth today? The solution, please. The correct answer is 422307.If you were to invest $50,000 from you lottery winnings today, how much will it be worth in 20 years assuming a 7% rate of return?
- 4. If you invest $10,000 today at an interest rate of 7% for 5 years, what is the present value of your investment? A) $7,957.62 B) $8,000 C) $10,000 D) $7,632.37 Show Calculation here:1. Suppose you win the lottery and are given the following three options: (1) Receive 30 million dollars today; (2) receive 2 million dollars per year over the next 25 years; or (3) receive 1 million dollars per year indefinitely (being passed on to your heirs). Which is the best deal, assuming that the annual interest rate is 4%? We answer this by working through the following sequence of questions. a. How much are the 2 million dollars received annually over the course of 25 years worth in terms of today's dollars, assuming an annual interest rate of 4%? b. Use the answer to part a. to find a general formula for the present value of payments of C dollars received each year over the next n years, assuming an average annual interest rate r. c. Find a formula for the present value if annual payments of C dollars continue indefinitely, assuming an average annual interest rate r. d. Use the answer to part c. to determine the present value of 1 million dollars paid annually indefinitely.…Suppose you have a financial investment opportunity for which if you invest $2,000 today, you will receive $100 per year for 3 years plus $2,500 in the third year. Is this worthwhile in financial terms if the interest rate on the best alternative use of the funds is 10% How would I plug this into a finacial calculator? usin N, I/Y, PV, PMT,FV