Suppose you just won the state lottery, and you have a choice between receiving $2,455,000 today or a 20-year annuity of $230,000, with the first payment coming one year from today. What rate of return is built into the annuity? Disregard tax O a. 9.37% O b. 6.57% O c.6.90% O d. 7.90% O e. 12.57%

Q: Suppose you just won the state lottery, and you have a choice between receiving $3,550,000 today or…

A: Choice-1 Amount to receive today is $3,550,000 Choice -2 Annuity amount is $250,000 Time period is…

Q: A lottery offers you a choice of $1,000,000 per year for 30 years or a lump-sum payment. What…

A: Time value of money: The time value of money is the idea that the value of money received today will…

Q: In 1940, your gA lottery jackpot of one million is paid out $25,000 a year for 40 years. At a 10…

A: a) using excel PV function to calculate present value of annuity due

Q: ou won the lottery! You are considering whether or not to accept a lump sum amount or an annual…

A: Annual cash inflow (P) = $ 91,873 Discount rate (r) = 6% Number of annual deposits (n) = 12

Q: You just inherited some money, and the end of each year for 20 years. You could earn 5% on your…

A: Data given:: PMT(Annuity) = $16800 i= 5% n= 20 years nper= 20   Required:: Amount you should pay…

Q: You just purchased an annuity that will pay you $24,000 a year for 25 years, starting today. What…

A: Annual payment (P) = $ 24000 Number of annual payments (n) = 25 Interest rate (r) = 8.5%

Q: Suppose you just won the state lottery, and you have a choice between receiving $2,679,000 today or…

A: Using Rate function in excel

Q: ou just won the NY State Lottery. The Grand Prize is $275 million. Lottery officials give you a…

A: Upfront payment  $        27,50,00,000.00 Periodic Payment 15000000 Time Period 25 Interest…

Q: How much money is needed now to establish a perpetuity that pays $2,000 at the end of every quarter…

A: Perpetuity annuity involves sequence of infinite cash flows which do not have any end period. It is…

Q: The winner of a lottery is given a choice of $1,000,000 cash today or $2,000,000 paid out as…

A: The present value of an annuity is the current worth of the cash flows at a certain discounting rate…

Q: You just won the NY State Lottery. The Grand Prize is $275 million. Lottery officials give you a…

A: Present value of annuities to be received in future would give the value of money today can be…

Q: What will be the value in your account at the end of Year 30?

A: Future Value of Annuity: It represents the future worth of the annuity payments made for a given…

Q: Suppose you just won the state lottery, and you have two options: (1) receiving $2,550,000 now or…

A: IRR method provides a benchmark return for equating future worth and present worth.

Q: Your girlfriend just won the Florida lottery. She has the choice of $10,700,000 today or a 20-year…

A: Option 1 i.e. Present Value = 10,700,000 Time Period (N) = 20 years Annuity Amount = 1,050,000 End…

Q: Here's a question  you and 11 coworkers won 19 million which is 1,583,333.33 each from a lottery.…

A: Given:Future value=1583333.33Rate of return per period (i)=6%Number of period (n)=18 years

Q: You have a 401(k) plan, which is used for retirement savings, at work. If you plan to invest $5,000…

A: Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: You have a chance to buy an annuity that pays $2,500 at the end of each year for 3 years. You could…

A: Given,  The amount of annuity payment is 2,500 Number of years 3 Rate of interest is 5.5%

Q: You choose to invest your $3,435 income tax refund check (rather than spend it) in an account…

A: Investment (PV) = $3,435 Interest rate (r) = 6% Period (t) = 30 Years

Q: Suppose you just won the state lottery, and you have a choice between receiving $4,500,000 today or…

A: Given, Two options First option Single payment  recieve today   =$4500000 Second option Annual…

Q: How much money is needed now to establish a perpetuity that pays $2,000 at the end of every quarter…

A: given information   perpetuity that pays at the end of every quarter = $2000 interest rate = 2.5% =…

Q: Your uncle is trying to figure out how much he has to have set aside today to pay for his son's…

A: The value of current payment or upcoming flow of payments at any future date when flow of payment…

Q: Congratulations! You have just won a $40 million lottery and have elected to receive $2 million per…

A: Given information: Total prize money is $40,000,000 Annual payment is $2,000,000 Number of years…

Q: f you put up $41,000 today in exchange for a 5.1 percent, 15-year annuity, what will the annual cash…

A: Present value (PV) = $41000 Interest rate (r) = 5.1% Number of annual payments (n) = 15

Q: Suppose for an annuity due, you want to have S30,000 in the bank after 20 years. Assuming you make…

A: Time value of money is a concept that helps in determining the value of future cash flows…

Q: If you put up $38,000 today in exchange for a 6.75 percent, 14-year annuity, what will the annual…

A: Solution- We know that  PV=PMT[(1-(1+r)^-n)/r] Where PMT= Periodic payment r= rate n= number of…

Q: How much will Bill Rodgers need to invest today so that he may withdraw $7,000 each year for the…

A: The question is based on the concept of Financial Management.

Q: You choose to invest your $3,110 income tax refund check (rather than spend it!) in an account…

A: Future Value(FV) is worth of current amount at future time that is computed by compounding that…

Q: Your best friend won the state lottery and has offered to give you 500,000 in seven years, after he…

A: Present value of an investment is the trading price at which investment is available to the…

Q: Suppose you just won the state lottery, and you have a choice between receiving $4,500,000 today or…

A: The rate of return is the rate at which the investment project provides the return to the investors.…

Q: You would like to have enough money saved to receive a $90,000 per year perpetuity after retirement.…

A: Given, The cashflows is $90,000 The rate of interest is 8%

Q: d. Calculate the future sum of $1,000, given that it will be held in the bank for 5 years earning an…

A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: A student wants save for college which begins in four years.  How much will the student save…

A: Solution:- When an equal amount is deposited each period at beginning of period, it is called…

Q: Suppose you just won the state lottery, and you have a choice between receiving $3,600,000 today or…

A: An annuity is the series of fixed payment which will be received in certain intervals. The rate of…

Q: Assume that Social Security promises you $30,000 per year starting when you retire 45 years from…

A: Time value of money is a concept that states that the value of the amount of money today is more…

Q: How much will you need to invest annually to reach a savings goal of $300,000 at the end of 25…

A: n=25r=5%FV=300000

Q: A donor of the University of Alberta wants to establish a scholarship that pays out each year…

A: The inflation rate reduces the purchase ability of nominal money because it results for rise in…

Q: An insurance company offers you an end-of-year annuity of $48,000 per year for the next 20 years.…

A: With the Ordinary annuity or end of year annuity, payments begin at the end of a period.

Q: Your dreams of becoming rich have just come true. You have won the State of​ Tranquility's Lottery.…

A: We need to calculate rate by using future value and annuity stream  it is calculated using rate…

Q: What is the monthly payment for a home costing $475,000 with a 20% down payment and the balance…

A: Given: Cost of home = $475000 Down payment = 20% Number of years = 30 Number of months "n" = 30*12 =…

Q: To save for a down payment on a home, suppose you decide to invest in an annuity that pays 7.0%…

A: This is the question of annuity. Annuity is the stream of constant cashflow occurring at regular…

Q: Use the future value of an annuity due formula to calculate how much (in $) you would have in the…

A: In this question, if the amount is deposit at the beginning of the year then the period we will use…

Q: Which is a better way to invest $7,000 if the concern is simply the future value: a 2-year…

A: Option 1 - Investing $ 7000  for 2 years at 2.2% quarterly Option  2- Investing divided $ 7000 in…

Q: how large must the annual annuity payments be to make you indifferent between the two​ choices?

A: Present Value: It is the present worth of the future amount or future annuity payments.  These…

Q: Sebastopol Movie Theater will need $170,000 in 4 years to replace the seats. What deposit should be…

A: Since the amount is needed in 4 years to replace the seats, the future value is given as $170,000

Q: Assume that you just won the state lottery. Your prize can be taken either in the form of $40,000 at…

A: Present value is the current worth of future cashflows discounted at any given rate.