As winner of a breakfast cereal competition, you can choose one of the following prizes. If the interest rate is 12 percent, which is the most valuable prize? £11,400 a year forever £19,000 for each of the next 10 years. £180,000 at the end of five years. £100,000 now.
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As winner of a breakfast cereal competition, you can choose one of the following prizes. If the interest rate is 12 percent, which is the most valuable prize?
-
£11,400 a year forever
-
£19,000 for each of the next 10 years.
-
£180,000 at the end of five years.
-
£100,000 now.
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- As winner of a breakfast cereal competition, you can choose one of the following prizes. If the interest rate is 12%, which is the most valuable prize (A) $100,000 now (B) $180,000 at the end of five years (C) $19,000 for each of 10 years.The winner of a $10,000,000 prize has the following payment choices. If the interest rate is 10%, which choice is best? Select one: a. $3,000,000 per year for 12 years b. $2,000,000 per year for 50 years c. $10,000,000 now d. $55,000,000 in 10 years e. All of choices are the sameIf a person spends $10 a week on coffee (assume $500 a year), what would be the future value of that amount over 10 years if the funds were deposited in an account earning 4 percent?
- You are scheduled to receive $5,000 in two years. When you receive it, you will invest it at 6.5 percent per year. How much will your investment be worth eight years from now? Can the excel and calculator solutions be provided?Suppose you have a choice between receiving $5,000 today or $10,000 in five years. You believeyou can earn 10% on the $5,000 today, but want to know what the $5,000 will be worth in fiveyearsA morning radio show offered the following four prizes as alternative prizes for one of its competitions. Which prize is the most valuable if your discount rate is 6%? (Show working to justify your answer.) (a) $5,000 per year, forever, with the first amount paid after 1 year. (b) $12,000 per year for eight years, with the first amount paid today. (c) $20,000 today and $80,000 six years from now. (d) $15,000 per year for ten years, with the first amount paid at year 5. (e) State the most valuable prize. (Give a reason for your choice.)
- The prize in last week’s lottery was estimated to be worth $90 million. If you were lucky enough to win, the payment will be $3.6 million per year over the next 25 years. Assume that the first installment is received immediately. If interest rates are 6%, what is the present value of the prize? If interest rates are 6%, what is the future value after 25 years? How would your answers change if the payments were received at the end of each year? How would your answers change if the interest rate was higher?You are offered $100,000 today or $300,000 in 13 years. Assuming that you can earn 11 percent on your money, which should you choose? If you are offered $300,000 in 13 years and you can earn 11 percent on your money, what is the present value of $300,000? $ ___________(Round to the nearest cent.)After 10 years, the estimated price of an apartment of 20 pyeong is 200 million won. If you save a certain amount every year for 10 years in a fixed deposit with an annual interest rate of 10%, how much should you save? Can you buy an apartment in 10 years? (However, payment at the end of the year)
- If a person saves $62 a month by using coupons and doing comparison shopping, (a) what is the amount for a year? (b) What would be the future value of this annual amount over 10 years, assuming an interest rate of 4 percent?As a result of winning the Gates Energy Innovation Award, you are awarded a growing perpetuity. The first payment will occur in a year and will be for $10,000. You will continue receiving monetary awards annually with each award increasing by 5 percent over the previous award, and these monetary awards will continue forever. If the appropriate interest rate is 12 percent, what is the present value of this award?You just won a $625,000 lottery prize! You will receive $25,000 per year for the next 25 years, starting today, a total of $625,000. If the current interest rate is 1.9% compounded annually, what is the cash value of this prize?