Question: Bank A offers to pay you lump sum of 20 000
Bank A offers to pay you lump sum of $20,000 after 5 years, if you deposit $9,500 with them today. Bank B, on the other hand, says that they will pay you a lump sum of $22,000 after 5 years, if you deposit $10,700 with them today. Which offer should you accept and why?
Answer to relevant QuestionsYou have decided that you will sell off your house, which is currently valued at $300,000 when it appreciates in value to $450,000. If houses are appreciating at an average annual rate of 4.5% in your neighborhood, for how ...If you won the lottery and had the choice of the lump-sum payoff or the annuity payoff, what factors would you consider besides the implied interest rate (indifference interest rate) in selecting the payoff style?Fill in the missing present values in the following table for an ordinaryannuity.Chuck Ponzi has talked an elderly woman into loaning him $25,000 for a new business venture. She has, however, successfully passed a finance class and requires Chuck to sign a binding contract on repayment of the $25,000 ...A lottery ticket states that you will receive $250 every year for the next ten years.a. What is the value of the winning lottery ticket in present value if the discount rate is 6%, and it is an ordinary annuity?b. What is ...
Post your question