Assume the same data as in Exercise 1419, except that the current interest rate is 12%. Will
Question:
Assume the same data as in Exercise 14–19, except that the current interest rate is 12%. 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 5%? Why or why not?
Data From Exercise 14-19:
On January 1, 2016, you win $50,000,000 in the state lottery. The $50,000,000 prize will be paid in equal installments of $6,250,000 over eight years. The payments will be made on December 31 of each year, beginning on December 31, 2016. If the current interest rate is 5%, determine the present value of your winnings. Use the present value tables in Appendix A.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Accounting
ISBN: 978-1285743615
26th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
Question Posted: