You have won a total of $75,000.00 from a contest participating in a reality television program. The prize money will be used to make future investments and that can promise returns for each year. After looking at several investment options available in the market, there is an opportunity where you will receive a return of $40,000.00 for 5 years earned at the end of the year. However, the returns can only be earned in the 4th year until the 8th year.

REQUIRED:

Assuming the rate of return is 20%, is the amount of prizes you earn enough to choose the investment you are currently considering. Show calculations to support your answer.

You may refer the attachment below if needed :

https://drive.google.com/file/d/1BoFIxu_Ewf6jwh0N--MEzoEyAGb-wvJw/view?usp=sharing

Table 1: Future Value Interest Factor for $ 1.00 Compounded: FVIF k,n = (1 + k)n

Table 2: Future Value Interest Factor for $ 1.00 Annuity Compounded: FVIFA k,n = [(1 + k)n - 1]/k

Table 3: Present Value Interest Factor for $ 1.00 Discounted: PVIF k,n = 1/(1 + k)n

Table 4: Present Value Interest Factor for $ 1.00 Annuity Discounted: PVIFA k,n = [1-1/(1 + k)n]/k

Answer rating: 100% (QA)

Based on the information provided You won a total of 75000 from the reality TV show prize The inv... View the full answer