Using a financial calculator yields a present value for option 2 of approximatelyand a present value for option 3 ofapproximately(when the interest rate is 8.00%). Based on this, Dmitri should choose optionif he seeks to maximizepresent value.Now assume the interest rate is 9.00%, entered as 9 on your financial calculator.Note: Take the absolute value of the present value when answering this question.and a presentUsing the table you just filled out and a financial calculator, yields a present value for option 2 of approximatelyif hevalue for option 3 of approximately(when the interest rate is 9.00%). Based on this, Dmitri should choose optionseeks to maximize present value.Assume the interest rate is 10.00%, entered as 10 on your financial calculator.Note: Take the absolute value of the present value when answering this question.and a presentUsing the table you just filled out and a financial calculator, yields a present value for option 2 of approximatelyif hevalue for option 3 of approximately(when the interest rate is 10.00%). Based on this, Dmitri should choose option ▼seeks to maximize present value.attractive, relative to option 1As the interest rate increases, options 2 and 3 become Suppose that Dmitri just won the lottery and must choose between three award options:1. A lump sum of $40,000,000 received today2. 15 end-of-year payments of $5,000,0003. 40 end-of-year payments of $3,600,000Assume the interest rate is 8.00%, entered as 8 on your financial calculator.Note: Take the absolute value of the present value when answering this question.Using a financial calculator yields a present value for option 2 of approximatelyand a present value for option 3 ofapproximately(when the interest rate is 8.00%). Based on this, Dmitri should choose optionif he seeks to maximizepresent value.Now assume the interest rate is 9.00%, entered as 9 on your financial calculator.Note: Take the absolute value of the present value when answering this question.Using the table you just filled out and a financial calculator, yields a present value for option 2 of approximatelyand a presentvalue for option 3 of approximatelyv (when the interest rate is 9.00%). Based on this, Dmitri should choose option vif heseeks to maximize present value.Assume the interest rate is 10.00%, entered as 10 on your financial calculator.Note: Take the absolute value of the present value when answering this question.and a presentUsing the table you just filled out and a financial calculator, yields a present value for option 2 of approximately

The present value of an annuity: When a fixed amount of money is received or paid at constant…

sing a financial calculator yields a present value for option 2 of approximately and a present value for option 3 of proximately (when the interest rate is 8.00%). Based on this, Dmitri should choose option if he seeks to maximize resent value. Now assume the interest rate is 9.00%, entered as 9 on your financial calculator. Note: Take the absolute value of the present value when answering this question. and a present Using the table you just filled out and a financial calculator, yields a present value for option 2 of approximately if he value for option 3 of approximately (when the interest rate is 9.00%). Based on this, Dmitri should choose option seeks to maximize present value. Assume the interest rate is 10.00%, entered as 10 on your financial calculator. Note: Take the absolute value of the present value when answering this question. and a present Using the table you just filled out and a financial calculator, yields a present value for option 2 of approximately if he value for option 3 of approximately (when the interest rate is 10.00%). Based on this, Dmitri should choose option seeks to maximize present value. and 3 hecome attractive, relative to option 1

sing a financial calculator yields a present value for option 2 of approximately and a present value for option 3 of proximately (when the interest rate is 8.00%). Based on this, Dmitri should choose option if he seeks to maximize resent value. Now assume the interest rate is 9.00%, entered as 9 on your financial calculator. Note: Take the absolute value of the present value when answering this question. and a present Using the table you just filled out and a financial calculator, yields a present value for option 2 of approximately if he value for option 3 of approximately (when the interest rate is 9.00%). Based on this, Dmitri should choose option seeks to maximize present value. Assume the interest rate is 10.00%, entered as 10 on your financial calculator. Note: Take the absolute value of the present value when answering this question. and a present Using the table you just filled out and a financial calculator, yields a present value for option 2 of approximately if he value for option 3 of approximately (when the interest rate is 10.00%). Based on this, Dmitri should choose option seeks to maximize present value. and 3 hecome attractive, relative to option 1

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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Similar questions

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Archibald Andrews has just learned that he won $1,040,000 in the lottery. Archie has three options for payment:Option A: a lump-sum payment of $1,040,000 right now, in which case 45% will be deducted for taxes. We do not know the level of Archie’s investment skills and therefore are unsure what rate of return he will earn on the lump sum.Option B: 20 equal annual payments of $72,000, the first to occur immediately. Taxes of 25% of will be deductedfrom each payment. Assume an inherent interest rate of 8% APR.Option C: 36 equal semi-annual payments of $36,000, the first to occur in exactly one year. Taxes of 15% will be deducted from each payment. For this option, assume interest of 8% APR, compounded semi-annually.Calculate the present value of each option A, B, and C.
Assume that you have just won the lottery. Lotto officials offered you the choice of two alternative payouts: ₱10,000,000 today; or ₱30,000,000 seven years from now. As a wise and financial literate individual, which payment will you choose if relevant interest rate is 10%? Explain your choice in not more than ten (10) sentences and support it with your computation.
Archibald Andrews has just learned that he won $1,040,000 in the lottery. Archie has three options for payment: 20 equal annual payments of $72,000, the first to occur immediately. Taxes of 25% of will be deducted from each payment. Assume an inherent interest rate of 8% APR. What is the present value?
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