Shelley wants to cash in her winning lottery ticket. She can either receive sixteen $100,000 semiannual payments starting today, or she can receive a single-amount payment today based on a 6% annual interest rate. What is the single-amount payment she can receive today?
Shelley wants to cash in her winning lottery ticket. She can either receive sixteen $100,000 semiannual payments starting today, or she can receive a single-amount payment today based on a 6% annual interest rate. What is the single-amount payment she can receive today?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Present and future value tables of $1 at 3% are presented below:
| N | FV $1 | PV $1 | FVA $1 | PVA $1 | FVAD $1 | PVAD $1 |
| 1 | 1.03000 | 0.97087 | 1.0000 | 0.97087 | 1.0300 | 1.00000 |
| 2 | 1.06090 | 0.94260 | 2.0300 | 1.91347 | 2.0909 | 1.97087 |
| 3 | 1.09273 | 0.91514 | 3.0909 | 2.82861 | 3.1836 | 2.91347 |
| 4 | 1.12551 | 0.88849 | 4.1836 | 3.71710 | 4.3091 | 3.82861 |
| 5 | 1.15927 | 0.86261 | 5.3091 | 4.57971 | 5.4684 | 4.71710 |
| 6 | 1.19405 | 0.83748 | 6.4684 | 5.41719 | 6.6625 | 5.57971 |
| 7 | 1.22987 | 0.81309 | 7.6625 | 6.23028 | 7.8923 | 6.41719 |
| 8 | 1.26677 | 0.78941 | 8.8923 | 7.01969 | 9.1591 | 7.23028 |
| 9 | 1.30477 | 0.76642 | 10.1591 | 7.78611 | 10.4639 | 8.01969 |
| 10 | 1.34392 | 0.74409 | 11.4639 | 8.53020 | 11.8078 | 8.78611 |
| 11 | 1.38423 | 0.72242 | 12.8078 | 9.25262 | 13.1920 | 9.53020 |
| 12 | 1.42576 | 0.70138 | 14.1920 | 9.95400 | 14.6178 | 10.25262 |
| 13 | 1.46853 | 0.68095 | 15.6178 | 10.63496 | 16.0863 | 10.95400 |
| 14 | 1.51259 | 0.66112 | 17.0863 | 11.29607 | 17.5989 | 11.63496 |
| 15 | 1.55797 | 0.64186 | 18.5989 | 11.93794 | 19.1569 | 12.29607 |
| 16 | 1.60471 | 0.62317 | 20.1569 | 12.56110 | 20.7616 | 12.93794 |
Shelley wants to cash in her winning lottery ticket. She can either receive sixteen $100,000 semiannual payments starting today, or she can receive a single-amount payment today based on a 6% annual interest rate. What is the single-amount payment she can receive today?
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