Question 3. You participate in an Instagram contest and you are offered the following prizes. If...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Question 3. You participate in an Instagram contest and you are offered the following prizes. If the annual interest rate is 8% APR, which one is the most valuable prize? Show your calculations for each alternative, in writing and in Excel. (20 points) A) $150,000 now. B) $170,000 at the end of 6 years (t=6). C) $10,000 per year forever, the first payment starts today (t=0). D) $9,000 a year forever (starting at t=1) that will grow forever at a 2% rate. E) $800,000 at the end of 20 years (t=20). F) 8 semi-annual payments of $14,000 where the first payment starts at the end of the first semester (t=1). G) $14,000 a year, starting at the beginning of this year (t=0) for 12 payments. H) $70,000 in year 2 and $50,000 in year 4. Question 3. You participate in an Instagram contest and you are offered the following prizes. If the annual interest rate is 8% APR, which one is the most valuable prize? Show your calculations for each alternative, in writing and in Excel. (20 points) A) $150,000 now. B) $170,000 at the end of 6 years (t=6). C) $10,000 per year forever, the first payment starts today (t=0). D) $9,000 a year forever (starting at t=1) that will grow forever at a 2% rate. E) $800,000 at the end of 20 years (t=20). F) 8 semi-annual payments of $14,000 where the first payment starts at the end of the first semester (t=1). G) $14,000 a year, starting at the beginning of this year (t=0) for 12 payments. H) $70,000 in year 2 and $50,000 in year 4.
Expert Answer:
Answer rating: 100% (QA)
To determine the most valuable prize among the given alternatives we need to calculate the present value of each option using the annual interest rate ... View the full answer
Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
Posted Date:
Students also viewed these finance questions
-
New Century Coffee ( NCC ) Company is a 1 2 4 - store coffee retailer headquartered in San Jose and operating throughout 5 western states. Its stores are known for their stylish and artistic...
-
KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
-
Which will undergo the greater rate of cooling: a red-hot poker in a warm oven or a red-hot poker in a cold room (or do both cool at the same rate)?
-
Which measure of days' sales in receivables are preferable, 30 or 40? Give your reason.
-
Which phase in the fi nancial statement analysis framework is most likely to involve producing updated reports and recommendations? A. Follow-up. B. Analyze/interpret the processed data. C. Develop...
-
How are contingent liabilities accounted for under GAAP? a. Disclosed in the notes if it is probable that the company will incur a loss but the amount cannot be reasonably estimated. b. Reported on...
-
Hahn Textiles has a tax loss carry forward of $800,000. Two firms are interested in acquiring Hahn for the tax loss advantage. Reilly Investment Group has expected earnings before taxes of $200,000...
-
A brief explanation of the ethical dilemma An explanation of the ethical framework that, if applied by the organizational leadership to make its decision, would have resolved the ethical dilemma,...
-
Calculate the cash cycle based on the following information: Sales = $120,920 COGS = $65,602 Inventory = $8,370 Accounts Receivable = $33,884 Accounts Payable = $13,416 B) The terms of the sale were...
-
Georgia will be home to Hyundai's first dedicated EV plant and battery manufacturing facility in the United States, the company announced Friday. Hyundai is investing almost $5.5 billion to the EV...
-
I need to create a infographics for HIV based on the enclosed outline Overview of the policy Those involved in advocating and developing the policy (individuals and/or groups) Any opposition the...
-
(a) Show that the optimal solution does not require selling brand A3. (b) How much must the price per can of A3 increase for B&K to sell it? (c) To compete with other stores, B&K decided to reduce...
-
What database provides localized data, but is synchronized together for a more global database system? give explanation with reason
-
how to construct a syllogism showing that John has parents.
-
1) reflect on your own experience which lines in this poem are meaningful to you? 2) summarize the main message of this poem 3) what is your opinion of the message of this poem? agree? disagree?...
-
Why is it necessary to study the diffusion of molecules in biological systems?
-
Suppose two players are asked to split $100 in a way that is agreeable to both. A: The structure for the game is as follows: Player 1moves firstand he is asked to simply state some number between...
-
We developed our first graphical model of adverse selection in the context of car insurance in section 22A.2 where we assumed that the marginal cost MC1 of providing car insurance to unsafe drivers...
-
This exercise explores in some more detail the relationship between production technologies and marginal product of labor. A: We often work with production technologies that give rise to initially...
-
At December 31, 2015, Suffolk Corporation had an estimated warranty liability of 105,000 for accounting purposes and 0 for tax purposes. (The warranty costs are not deductible until paid.) The...
-
The following information is available for McKee Corporation for 2015. 1. Excess of tax depreciation over book depreciation, 40,000. This 40,000 difference will reverse equally over the years...
-
State whether each of the following events will result in a movement along General Motors (GMs) demand curve for labor in their U.S. automobile factories or whether it will cause its demand curve for...
Study smarter with the SolutionInn App