Question

Assume the same data as in Appendix 1 Exercise 12-19, Except that the current interest rate is 12%.
In Appendix 1 Exercise 12-19, On January 1, 2014, you win $75,000,000 in the state lottery. The $75,000,000 prize will be paid in equal installments of $7,500,000 over 10 years. The payments will be made on December 31 of each year, beginning on December 31, 2014. If the current interest rate is 7%, determine the present value of your winnings. Use the present value tables in Appendix A.
Will the present value of your winnings using an interest rate of 12% be more than the present value of your winnings using an interest rate of 7%? Why or why not?



$1.99
Sales3
Views698
Comments0
  • CreatedFebruary 28, 2014
  • Files Included
Post your question
5000