Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $60,000 cash immediately, (2) $18,000 cash immediately and a six-period annuity of $7,500 beginning one year from today, or (3) a six-period annuity of $11,800 beginning one year from today. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 1. Assuming an interest rate of 5%, determine the present value for the above options. Which option should Alex choose? 2. The Weimer Corporation wants to accumulate a sum of money to repay certain debts due on December 31, 2030. Weimer will mak annual deposits of $105,000 into a special bank account at the end of each of 10 years beginning December 31, 2021. Assuming that the bank account pays 6% interest compounded annually, what will be the fund balance after the last payment is made on December 31, 2030? Answer is not complete.

Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $60,000 cash immediately, (2) $18,000 cash immediately and a six-period annuity of $7,500 beginning one year from today, or (3) a six-period annuity of $11,800 beginning one year from today. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 1. Assuming an interest rate of 5%, determine the present value for the above options. Which option should Alex choose? 2. The Weimer Corporation wants to accumulate a sum of money to repay certain debts due on December 31, 2030. Weimer will mak annual deposits of $105,000 into a special bank account at the end of each of 10 years beginning December 31, 2021. Assuming that the bank account pays 6% interest compounded annually, what will be the fund balance after the last payment is made on December 31, 2030? Answer is not complete.

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money

Section: Chapter Questions

Problem 9.20MCE

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Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $64,000 cash immediately, (2) $20,000 cash immediately and a six-period annuity of $8,000 beginning one year from today, or (3) a six -period annuity of $13,000 beginning one year from today. (FV of $1, PV of $1, FVA of $1, FVAD of $1 and PVAD of $1) Required 1. Assuming an interest rate of 6%, determine the present value for the above options. Which option should Alex choose? Annuity PV Annuity Immediate PV Option Payment Cash Option 1 ____________ _________ + __________ = $__________0 Option 2 ____________ _________ + __________ = $ 0 Option 3 ____________ __________ + ___________ =…
Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $94,000 cash immediately, (2) $38,000 cash immediately and a six-period annuity of $9,700 beginning one year from today, or (3) a six-period annuity of $19,600 beginning one year from today. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 1. Assuming an interest rate of 7%, determine the present value for the above options. Which option should Alex choose?2. The Weimer Corporation wants to accumulate a sum of money to repay certain debts due on December 31, 2030. Weimer will make annual deposits of $190,000 into a special bank account at the end of each of 10 years beginning December 31, 2021. Assuming that the bank account pays 8% interest compounded annually, what will be the fund balance after the last payment is made on December 31, 2030?
Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $64,000 cash immediately, (2) $20,000 cash immediately and a six-period annuity of $8,000 beginning one year from today, or (3) a six-period annuity of $13,000 beginning one year from today. Assuming an interest rate of 6%, which option should Alex choose?
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Alex Kelton recently won the jackpot in the Colorado lottery while he was visiting his parents. When he arrived at the lottery office to collect his winnings, he was offered the following three payout options:a. Receive $100,000,000 in cash today.b. Receive $25,000,000 today and $9,000,000 per year for eight years, with the first payment being received one year from today.c. Receive $15,000,000 per year for 10 years, with the first payment being received one year from today.Assuming that the effective rate of interest is 7%, which payout option should Alex select? Use the present value tables in Appendix A. Explain your answer and provide any necessary supporting calculations.
Alex Kelton recently won the jackpot in the Colorado lottery while he was visiting his parents. When he arrived at the lottery office to collect his winnings, he was offered the following three payout options: Receive $100,000,000 in cash today. Receive $25,000,000 today and $9,000,000 per year for eight years, with the first payment being received one year from today. Receive $15,000,000 per year for 10 years, with the first payment being received one year from today. Assuming that the effective rate of interest is 7%, which payout option should Alex select? Use the present value tables in Appendix A. Explain your answer and provide any necessary supporting calculations.
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Michael won a lottery that will pay him $ 480000 at the end of each of the next twenty years. Blue Spruce has offered to purchase the payment stream for $ 5505600. What interest rate (to the nearest percent) was used to determine the amount of the payment? 9%. 8%. 7%. 6%
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Susan won the lottery today which will pay an annual perpetuity of X, with the first payment occurring five years from today. The perpetuity has a present value of 100,000 based on an annual effective interest rate of 1% for the first ten years and 5% for all years thereafter. Calculate X. A. 4,100 B. 4,224 C. 4,357 D. 4,401 E. 5,696
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