Suppose you won the lottery but not all of your winnings will come in one year. Instead,

Fantastic news! We've Found the answer you've been seeking!

Question:

Suppose you won the lottery but not all of your winnings will come in one year. Instead, you will get a series of annual payments over the next five years. The table below tells you what your payment will be every year for the next five years. Use the information in the table to make the following computations:

A. The present and future value of your lottery ticket if the interest rate is 8%

B. The present and future value of your lottery ticket if the interest rate is 10%

Year	Payment
1	5000
2	6000
3	7000
4	8000
5	9000

Related Book For answer-question

Fundamentals of Financial Management

ISBN: 978-0324664553

Concise 6th Edition

Authors: Eugene F. Brigham, Joel F. Houston

See More Books

Posted Date: Jun 12, 2019 01:36 AM

See More Questions

Suppose you won the lottery and had two options: (1) receiving $0.5 million or (2) taking a gamble in which at the flip of a coin you receive $1 million if a head comes up but receive zero if a tail...
Suppose it is 2020, the 1-year interest rate is 8 percent, and the 10-year rate is 6 percent. a. Draw a graph showing a likely path of the 1-year rate from 2020 through 2029. b. Why might people...
If the interest rate is 6% per year, how long will it take for your money to quadruple in value? If the inflation rate is 4% per year, what will be the change in the purchasing power of your money...
The position of a particle moving along 12t2 2t, where r is in meters and t is in an r-axis is given by x = seconds. i Determine the acceleration of the particle at t = 3.0 s. ii What are the...
At the end of the current month, Gil Frank prepared a trial balance for College App Services. The credit side of the trial balance exceeds the debit side by a significant amount. Gil has decided to...
JF Outz, MD, has been a cardiologist for three years. During April 2018, Outz completed the following transactions in his cardiology practice: Apr. 1. He paid rent for the office in April, $800. 3....
The price of a non-dividend paying stock is $$19$ and the price of a three-month European call option on the stock with a strike price of $$20$ is $$1.$ The risk-free rate is 4% per annum. What...
The differences between the book basis and tax basis of the assets and liabilities of Castle Corporation at the end of 2008 are presented below. It is estimated that the litigation liability will be...
35. Expandiendo e sin en serie de Fourier en wt, mostrar que la ecuacin trascendedente de Kepler tiene la solucin formal: = wt+Jn(ne) sin (wt), n=1 n 2 donde J, es la funcin de Bessel de orden n....
Joe and Jessie are married and have one dependent child, Lizzie. Lizzie is currently in college at State University. Joe works as a design engineer for a manufacturing firm while Jessie runs a craft...
Which of the following statements is correct in relation to the possible reason(s) for IPO underpricing? O IPO underpricing can occur in order to hide information about the firm from institutional...
Determine the cross covariance function of the ARAM(1,1) process defined by - (0.5 0.5). X AX-E Aet-1 &~ WN(0, 12), A=
A chemist must determine the coefficients x, (for 1 j 5) that balance the reaction Cu + HNO3 23Cu(NO3)2 + xNO+x5HO. In order to balance this reaction, there must be an equal number of each element...
AllTech had a penetration of 100K last month and estimates a repeat rate of 90% this month. They also expect to add another 10K customers this month. Typically customers will buy an average of 3...
Every year, the board of directors of Northern Power, a distributor of electricity, commissions an effectiveness evaluation of its audit committee. An independent consultant with expertise in...
The population of Leavetown was 123000 in the year 2000 the population kept increasing at a yearly rate of 3.75% for 10 years. After that, due to exconomic slowdown, the population starts to decrease...
2. (Rayleigh quotient) For a matrix A Rx, the Rayleigh quotient is defined as R(x) = x'Ax xtx Vx 0. a. Show that R(v) = A if A is an eigenvalue of A and v is the corresponding eigenvec- tor. b. If A...
In Exercises discuss the continuity of each function. f(x) -3 1 x - 4 y 3 2 -1 -2 -3+ 3 X
Assume that SKIs payables deferral period is 30 days. Now calculate the firms cash conversion cycle .
If you were the CFO of a company that had to decide on hundreds of potential projects every year, would you want to use sensitivity analysis and scenario analysis as described in the chapter or would...
Discuss the pros and cons of having the directors formally announce what a firms dividend policy will be in the future.
Classify the following topics as primarily macroeconomic or microeconomic: 1. The impact of a tax increase on aggregate output. 2. The relationship between two competing firms pricing behavior. 3. A...
Use the high and low volatility scenarios that we used for the call option to show that put options also are worth more when stock price volatility is higher.
In light of this discussion, explain why the put-call parity relationship is valid only for European options on non-dividend-paying stocks. If the stock pays no dividends, what inequality for...

Suppose you won the lottery but not all of your winnings will come in one year. Instead,

Question:

Expert Answer:

A PV npv008values 2733598 B PV npv01values 2581574 For FV all cash flows to ... View the full answer

Fundamentals of Financial Management

Students also viewed these accounting questions