To give you a start, here is something you can compute and discuss among yourselves:Play-2-Win is the latest lottery game in your country, and you happen to be the latest winner of $10.5 million. Your government has a guarantee on the funds and will not be paid before 3 years from today. You can however sell your claim today at a rate of 8 percent for a lump sum cash payment. What is the least amount you will sell your claim?Beginning this year, Mary is planning to save $800 each year for the next six years to take a vacation to commemorate the seventh year of her career. Assuming the interest rate offered by her bank is 9 percent annually, how much will Mary have in the account at the end of seven years? If Mary increases her savings to $1,500 annually, will this be enough to take care of her vacation which is estimated to cost $15,000.Suggested Answers that you should arrive at after computing and discussing. Give the questions a try when you are ready.Question 1: $8,335,238.53Question 2: i) $7,360.35; ii) No it will not. $13,800.65 would be saved.

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Answered: To give you a start, here is something…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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To give you a start, here is something you can compute and discuss among yourselves:

Play-2-Win is the latest lottery game in your country, and you happen to be the latest winner of $10.5 million. Your government has a guarantee on the funds and will not be paid before 3 years from today. You can however sell your claim today at a rate of 8 percent for a lump sum cash payment. What is the least amount you will sell your claim?
Beginning this year, Mary is planning to save $800 each year for the next six years to take a vacation to commemorate the seventh year of her career. Assuming the interest rate offered by her bank is 9 percent annually, how much will Mary have in the account at the end of seven years? If Mary increases her savings to $1,500 annually, will this be enough to take care of her vacation which is estimated to cost $15,000.

Suggested Answers that you should arrive at after computing and discussing. Give the questions a try when you are ready.

Question 1: $8,335,238.53
Question 2: i) $7,360.35; ii) No it will not. $13,800.65 would be saved.

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