Suppose you just won the state lottery, and you have two options: (1) receiving $2,550,000 now or (2) receiving a 20-year annuity with $250,000 payment at the end of each year. What rate of return is built into the annuity to make you indifferent with these two options?        A)  7.12%   B)  7.87%   C)  8.26%   D)  7.49%   E)  8.67%

Q: Suppose today is January 1, 2024 and you are given two options: a. an annuity that pays you 1000…

A: Present value is the estimation of the current value of future cash value which is likely to be…

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: Suppose you just won the state lottery, and you have a choice between receiving $2,825,000 today or…

A: Present value = pv = $2,825,000 Time = nper = 20 years Payment = pmt = $240,000

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: Your uncle is about to retire, and he wants to buy an annuity that will provide him with $95,000 of…

A: Annual Payment (P) = $95,000Interest rate (r) = 4.70% or 0.047Number of years (n) = 20Payment timing…

Q: 17) Sun Woo wants to purchase an annuity that will pay him $1,000 a month for fifteen years. If he…

A: The Present Value of Ordinary Annuity refers to the concept which dictates the discounted value of a…

Q: Your friend offers to pay you an annuity of $2,500 at the end of each year for 3 years in return for…

A: Annual Payment (P) = $2,500Interest rate (r) = 5.5% or 0.055Number of years (n) = 3

Q: Suppose that you won $1,500,000 in the Illinois state lottery. It will be paid to you over 20 years…

A: An annuity is end of year equal payments made for a fixed period of time at a specified interest…

Q: You have just won the lottery and took a lump sum payout. After talking with a financial adviser you…

A: Present value of $16,000: Present value: $376,205.407024

Q: (Solving for PMT of an annuity) To pay for your child's education, you wish to have accumulated…

A: PMT is a series of cash flows (annuity) and can be paid/received at the end of each period, called…

Q: 2. A retiree is considering purchasing an annuity that will provide them with an annual income of…

A:

Q: you just won the state lottery, and you have a choice between receiving $2,625,000 today or a…

A: Rate of return inbuilt in annuity is rate at which present value of annuity is equals to amount of…

Q: Suppose you win the lottery and you're thinking about whether to take the lump sum or be paid the…

A: First payment: $8 million (immediate payment at t=0)Discount rate: 7%Number of payments: 30Growth…

Q: 2. An brokage house employee is trying to sell you investment instrument, which for a single amount…

A: Present value = Annuity * PVAF ( rate, years ) Present value = Amount * PVIF ( rate, years )

Q: Mr. Lucky just won the lottery. He has a choice of $1,000,000 today or a $50,000 semi-annual payment…

A: The concept of time value of money will be used here.Amount today is the present value and…

Q: 1.1) You have just won the lottery and will receive $2.5 million in one year. You will receive…

A: As per Bartleby honor code, when multiple questions are asked, the expert is required only to solve…

Q: Incorrect Your answer is incorrect. The Barnes family wants to save money to travel the world. They…

A: Future Value of Ordinary Annuity: It represents the future worth of the annuity payments made at…

Q: you would like to have enough money saved to receive a $53,000 per year perpetuity after retirement.…

A: Perpetuity refers to something that lasts forever, without an end.It represents an infinite duration…

Q: our father is about to retire, and he wants to buy an annuity that will provide him with $93,000 of…

A: Annuity is a type of security that pays periodic payments over a period of time. When the payment is…

Q: A new investment opportunity for you is an annuity that pays $1,100 at the beginning of each year…

A: The maximum amount to be paid for annuity can be calculated by discounting future cash inflows at…

Q: Your father is about to retire, and he wants to buy an annuity that will provide him with $52,000 of…

A: Annuity = a = $52,000Time = t = 25Interest rate = r = 5.95%Payment Type = at the beginning

Q: Your uncle Barry is about to retire, and he wants to buy an annuity that will provide him with…

A: ANNUITY =77000 Period =25 years  interest rate =8.5%

Q: Suppose you deposited $39,000 in a bank account that pays 5.25% WI daily compounding based on a…

A: Future value is the amount initially deposited and amount of comounding interest accumulated over…

Q: After consulting with your financial advisor, you figured that you need $100,000 per year for your…

A: An annuity is a series of constant payment of a sum, yielding a certain rate of return.Information…

Q: ancial planner offers you two different investment plans. Plan X is an annual perpetuity of $12,000…

A: Perpetuity is annuity where there are payments forever and payment continue forever and other…

Q: Your aunt is about to retire, and she wants to sell some of her stock and buy an annuity that will…

A: Present value is an estimate of the present value of future cash values ​​that may be received at a…

Q: Your uncle is about to retire, and he wants to buy an annuity that will provide him with $6,000 of…

A: RATE 15.25% YEARS 24 PMT (MONTHLY PAYMENT) 6000 FUTURE VALUE $0 FIRST PAYMENT IMMEDIATE…

Q: 3. Rico wants to buy a retirement annuity that will pay him the first of 50 semiannual payments of…

A: Annuity refers to series of equalized payments that are made over definite period either at start of…

Q: A company wants to have $50,000 at the beginning of each 6-month period for the next 4 1/2 years. If…

A: Annuity is the regular payment to be made for specific number of years. There are two types of…

Q: A.)Your client has just been given a lump sum payout from his pension plan. He wants to purchase an…

A: Using excel PV function

Q: You are comparing two annuities. Annuity A pays $115 at the end of each year for 5 years. Annuity B…

A: Time, value, and money refer to the money present today being more valuable than the money will…

Q: 3. You won the lottery!  You are considering whether or not to accept a lump sum amount or an annual…

A: Annuity means a series of finite number of payments which are the same in size and made in equal…

Q: Your uncle is about to retire, and he wants to buy an annuity that will provide him with $7,100 of…

A: Immediate annuity payments are brought by investors by paying company in lump sum. Formula for…

Q: Your uncle is about to retire, and he wants to buy an annuity that will provide him with $97,000 of…

A: The objective of this question is to calculate the present value of an annuity due. An annuity due…

Q: ou have just won the lottery and will receive $460,000 in one year. you will receive payments for 21…

A: Present value of growing annuity With annuity (PMT), periodic interest rate (r), growth (g) and…

Q: You have just won a lottery that promises an annual payment of $120000 beginning immediately. You…

A: Present Value Present value is the current value of tomorrow's money at a specified rate of return…

Q: (Annuity interest rate) Your folks just called and would like some advice from you. An insurance…

A: Here,Present Value = pv = $36,828.58Payment = p = $4000Time = t = 20

Q: (Solving for PMT of an annuity) To pay for your child's education, you wish to have accumulated…

A: Future Value = fv = $19,000Time = t = 11 YearsInterest Rate = r = 15%

Q: Assume you won the state lottery and you are entitled to $5,000,000. If you choose not to take the…

A: Present value of the amount =  $5,000,000Amount to be received weekly over next 10 years1 year = 52…

Q: ssume you are at age 65 and have the following assets: 1. Pension Plan worth $500,000. You plan to…

A: According to the time value of money principle, individuals prefer to get a quantity of money as…

Q: Future value of an ordinary annuity: Robert Hobbes plans to invest $25,000 a year at the end of each…

A: The future value concept can be used for converting a stream of payments of a single amount to its…

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.