![Essentials Of Investments](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781260013924/9781260013924_smallCoverImage.jpg)
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Question
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
- Calculate the
present value of the payments you will receive. Show your calculations using formulas in your paper or in an attached spreadsheet file.
Expert Solution
![Check Mark](/static/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by stepSolved in 2 steps with 2 images
![Blurred answer](/static/blurred-answer.jpg)
Knowledge Booster
Similar 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 provide how to do the calculations in Excel. 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.arrow_forwardyou have just won the lottery and will receive $460,000 in one year. you will receive payments for 21 years, and the payments will increase 4 percent per year. if the appropriate discount rate is 11 percent, what is the present value of your winnings? Please explain how to solve using the financial calculator to show and explain steps thanksarrow_forwardSuppose you played a number picking game from the Lottery. Your lucky numbers are your five most recent test scores from this and other courses. As luck would have it, those numbers won you the jackpot. After having your picture taken with a giant fake cardboard check, the Lottery offers you an annuity consisting of 20 payments of $150,000, with the first payment received immediately after your photo session and 19 additional payments each year thereafter. Assuming a discount rate of 5%, what is the total value of your jackpot in present value terms? Write the answer below without dollar signs or commas, and express the answer to the nearest cent.arrow_forward
- You just won the lottery, which promises you $440,000 per year for the next 20 years. You receive the first payment today (hint: annuity due). If your discount rate is 9.00%, what is the present value of your winnings?arrow_forwardA lottery winner will receive $5.5 million every 6 months for the next twenty years. What is the future value (FV) of his winnings at the time of the final payment, given that the interest rate is 5.50% per year?arrow_forwardUse the TVM Calculator to solve the following compound interest problem. Round your result to two decimal places as needed.You invest $15,000in an account. The interest is compounded monthly at an annual rate of 10.6%. The ending account balance will be $81,174.68. How many months was the investment accruing interest?Enter the values you need to put in the TVM calculator. Put the letter xfor the unknown value. Remember that money paid to the bank is negative and money received from the bank is positive.PV= Present ValueN=Number of Compounding PeriodsPMT= Payment I%= Annual Interest Rate as a PercentFV= Future ValueP/Y and C/Y= Payments per Year and/orCompoundings per YearUse the link to the TVM Calculator below to solve the problem. The investment was accruing interest for months.arrow_forward
- You have Just won the lottery and will receive $490,000 in one year. You will receive payments for 29 years, and the payments will increase 4 percent per year. If the appropriate discount rate is 12 percent, what is the present value of your winnings?arrow_forwardAssume you won the state lottery and you are entitled to $5,000,000. If you choose not to take the money right away but wish to be paid weekly, you estimate that you will want to receive this cash flow over the next 10 years. How much will your weekly payment be at an interest rate of 5% ?arrow_forwardA lottery corporation sells a ticket for a chance to win $500,000. If you win, the prize winnings will be spread out over time with your first payment of $150,000 today. The second payment of $ 150,000 would be released to you in a year, and the last payment of $200,000 would be released the following year. If you could earn 3.5% compounded annually, what is the value of the prize today?arrow_forward
- The prize in last week’s lottery was estimated to be worth $90 million. If you were lucky enough to win, the payment will be $3.6 million per year over the next 25 years. Assume that the first installment is received immediately. If interest rates are 6%, what is the present value of the prize? If interest rates are 6%, what is the future value after 25 years? How would your answers change if the payments were received at the end of each year? How would your answers change if the interest rate was higher?arrow_forwardYou have just won a two-part lottery! The first part will pay you $50,000 at the end of each of the next 20 years. The second part will pay you $1,000 at the end of each month over the same 20 year period. Assuming a discount rate of 9%, what is the present value of your winnings? use a HP 10bII+ to solve itarrow_forwardYou have just won the lottery and will receive $1,000,000 in one year. You will receive payments for 35 years and the payments will increase by 4 percent per year. If the appropriate discount rate is 8 percent, what is the present value of (Do not round intermediate calculations and round your answer to 2 decimal places, 32.16.) your winnings? e.g., Present valuearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
- Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage LearningCorporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education
![Text book image](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781260013924/9781260013924_smallCoverImage.jpg)
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
![Text book image](https://www.bartleby.com/isbn_cover_images/9781260013962/9781260013962_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337909730/9781337909730_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9780134897264/9780134897264_smallCoverImage.gif)
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337395250/9781337395250_smallCoverImage.gif)
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
![Text book image](https://www.bartleby.com/isbn_cover_images/9780077861759/9780077861759_smallCoverImage.gif)
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education