Question: Storm Smith has won a big prize and will be given $200,000 every six months commencing today for the next 30 years. She requests that

Storm Smith has won a big prize and will be given $200,000 every six months commencing today for the next 30 years. She requests that you (her financial advisor) show all the inputs, calculations and descriptions in case that she invests the winnings at a rate of 8.54 percent per annum. What will be the:

i.Present value of the cash flows (2 marks)

ii.Future value of the cash flows (2 marks)

iii.Effective annual rate (1 mark)

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