You have just won the TVM Lottery. You will receive $1 million today plus another 10 annual
Question:
You have just won the TVM Lottery. You will receive $1 million today plus another 10 annual payments that increase by $165,000 per year. Thus, in one year you receive $1.165 million. In two years, you get $1.33 million, and so on. If the appropriate interest rate is 7.5 percent, what is the value of your winnings today?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 63% (11 reviews)
The time line is To solve this problem we need to find the PV of each lump sum and a...View the full answer
Answered By
Anurag Agrawal
I am a highly enthusiastic person who likes to explain concepts in simplified language. Be it in my job role as a manager of 4 people or when I used to take classes for specially able kids at our university. I did this continuously for 3 years and my god, that was so fulfilling. Sometimes I've skipped my own classes just to teach these kids and help them get their fair share of opportunities, which they would have missed out on. This was the key driver for me during that time. But since I've joined my job I wasn't able to make time for my passion of teaching due to hectic schedules. But now I've made a commitment to teach for at least an hour a day.
I am highly proficient in school level math and science and reasonably good for college level. In addition to this I am especially interested in courses related to finance and economics. In quest to learn I recently gave the CFA level 1 in Dec 19, hopefully I'll clear it. Finger's crossed :)
4.80+
2+ Reviews
10+ Question Solved
Related Book For
Corporate Finance Core Principles and Applications
ISBN: 978-1259289903
5th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
Question Posted:
Students also viewed these Business questions
-
Calculating Present Values You just won the TVM Lottery. You will receive $1 million today plus another 10 annual payments that increase by $400,000 per year. Thus, in one year, you receive $1.4...
-
You just won the TVM Lottery. You will receive $1 million today plus another 10 annual payments that increase by $600,000 per year. Thus, in one year, you receive $1.6 million. In two years, you get...
-
You just won the TVM Lottery. You will receive $1 million today plus another 10 annual payments that increase by $500,000 per year. Thus, in one year, you receive $1.5 million. In two years you get...
-
Assume that n is a positive integer. For each of the following algorithm segments, how many times will the innermost loop be iterated when the algorithm segment is implemented and run? 1) for k:=1 to...
-
1. Next year, the price of a stock is expected to be $2200 and the stock will pay a $55 dividend. The interest rate is 10%. Based on the Dividend-Discount model, what is the current price of this...
-
The First National Bank of Dogsville finds that its asset and liability portfolio contains the following distribution of maturities and repricing opportunities: When and by how much is the bank...
-
A food manufacturer is analyzing a sample of 400 corn kernels for the presence of a toxin. In this sample, three kernels have dangerously high levels of the toxin. Four kernels are randomly selected...
-
Madison Seniors Care Center is a nonprofit organization that provides a variety of health services to the elderly. The center is organized into a number of departments, one of which is the...
-
Suppose that a person has an average heart rate of 62.0 beats/min. How many beats does he or she have in 1.0 y? Incorrect not valid decimal or scientific notation. In 1.00 y?
-
You have been asked to determine a rough schedule for a nine-month Billing System Conversion project, as part of your job as a consultant to a Fortune 500 firm. The firm's old system was written in...
-
You need a 30-year, fixed-rate mortgage to buy a new home for 225,000. Your mortgage bank will lend you the money at an APR of 5.1 percent. However, you can only afford monthly payments of $875, so...
-
You have just purchased a new warehouse. To finance the purchase, youve arranged for a 30-year mortgage loan for 80 percent of the $3.9 million purchase price. The monthly payment on this loan will...
-
Discuss the functions of the parts labeled in the sketch you made for question.
-
In March, Blossom Company had the following unit production costs: materials $8 and conversion costs $6. On March 1, it had no work in process. During March, Blossom completed and transferred out...
-
Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $597,300 and has $349,600 of accumulated depreciation to date, with a new machine that has a...
-
This year, you purchased a ranch in Moriarty for $7,200,000 with a 20% down payment. You have a 30-year, 3.8% APR mortgage (compounded monthly); how much will you pay in interest in the 16th year of...
-
a) Given a table below, answer the following questions: EmployeeNo Project # Hours 123456789 32.5 123456789 7.5 666884444 453453453 453453453 333445555 333445555 333445555 333445555 999887777 1 2...
-
You have the following data collected on the production possibilities at your firm: Total Output (Q) Workers Employed (L) 0 1 2 5 6 9 10 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 93.11 100.24 0.00...
-
A model for the concentration at time t of a drug injected into the bloodstream is where a, b, and K are positive constants and b > a. Sketch the graph of the concentration function. What does the...
-
Solve the relation Exz:Solve therelation ne %3D
-
McKeekin Corp. has a project with the following cash flows: Year Cash Flow 0 ..................... $20,000 1 ...................... -26,000 2 ....................... 13,000 What is the IRR of the...
-
A stock market analyst is able to identify mispriced stocks by comparing the average price for the last 10 days to the average price for the last 60 days. If this is true, what do you know about the...
-
Are stockholders and creditors likely to agree on how much cash a firm should keep on hand?
-
How do advanced scenario planning methodologies, such as probabilistic forecasting, sensitivity analysis, and scenario stress-testing, inform the development of robust, adaptive visions that are...
-
How can leaders sustain momentum and relevance around visionary visions amidst evolving external environments, internal dynamics, and competing priorities, fostering adaptability, resilience, and...
-
Let U = {1, 2, 3, 4, 5, 6, 7, 8, 9, 10}, A = {1, 3, 5, 7, 9}, B = {2, 4, 6, 8, 10}, and C = {1, 2, 4, 5, 8, 9}. List the elements of each set. (a) CC c (b) ( A C ) c (c) A ( B C )
Study smarter with the SolutionInn App