Principles of Accounting Volume 2
19th Edition
ISBN: 9781947172609
Author: OpenStax
Publisher: OpenStax College
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Overview
In this activity, you will complete calculations and research that will help you understand how to evaluate the return and risk on investments.
Instructions
Answer these questions:
- You have just won the Strayer Lottery jackpot of $11,000,000. You will be paid in twenty-six equal annual installments beginning immediately. If you had the money now, you could invest it in an account with a quoted annual interest rate of 9% with monthly
compounding of interest. - Calculate the
present value of the payments you will receive. Show your calculations using formulas in your paper or in an attached spreadsheet file. - Explain why there is a difference between the present value of the Strayer lottery jackpot and the
future value of the twenty-six annual payments based on your calculations and the information provided.
- Calculate the
- Discuss the risk and return indicated by different bond ratings. Support your answer with references to your research.
- Use various bond websites to locate one of each of the following bond ratings: AAA, BBB, CCC, and D. Research the differences between the bond ratings, the required interest rates, and the risk. List the websites used as sources for this research.
- Identify the strengths and weaknesses of each rating.
This course requires the use of Strayer Writing Standards (SWS). The library is your home for SWS assistance, including citations and formatting. Please refer to the Library site for all support. Check with your professor for any additional instructions.
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