Quokka recently won the lottery and has the opportunity to receive $200,000 per year at the end of the year for the next 20 years. Assuming an annual interest rate of 5% is appropriate, the future value is 2.65330 × $200,000 = $530,660, the present value of an ordinary annuity is 12.46221 × $200,000 = $2,492,442, and the present value of an annuity due is 13.08532 × $200,000 = $2,617,064. What is the fair value of the lottery payments according to GAAP? a. $530,660 b. $2,492,442 c. $2,617,064 d. $4,000,000

Quokka recently won the lottery and has the opportunity to receive $200,000 per year at the end of the year for the next 20 years. Assuming an annual interest rate of 5% is appropriate, the future value is 2.65330 × $200,000 = $530,660, the present value of an ordinary annuity is 12.46221 × $200,000 = $2,492,442, and the present value of an annuity due is 13.08532 × $200,000 = $2,617,064. What is the fair value of the lottery payments according to GAAP? a. $530,660 b. $2,492,442 c. $2,617,064 d. $4,000,000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 6MC: You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years....

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