The best option if Ms. C can earn 7% annually. Lump Sum: It is a large amount of money paid on a single occasion instead of paying small amounts from time to time. The amount has been paid for the value of an asset or for other purposes of retirement.

Question

Kristina just won the lottery, and she must choose among three award options. She can elect to receive a lump sum today of $62 million, to receive 10 end-of-year payments of $9.4 million, or to receive 30 end-of-year payments of $5.4 million. If she thinks she can earn 7% percent annually, which should she choose? If she expects to earn 8% annually, which is the best choice? If she expects to earn 9%' ( explain well with important point ).

Answer 1

Question

Chapter 5, Problem 21P

a.

Summary Introduction

To determine: The best option if Ms. C can earn 7% annually.

Lump Sum: It is a large amount of money paid on a single occasion instead of paying small amounts from time to time. The amount has been paid for the value of an asset or for other purposes of retirement.

b.

Summary Introduction

To determine: The best option, if Ms. C can earn 8% annually.

c.

Summary Introduction

To determine: The best option, if Ms. C can earn 9% annually.

d.

Summary Introduction

To explain: Reason for interest rate affecting choices.

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Kristina just won the lottery, and she must choose among three award options. She can elect to receive a lump sum today of $62 million, to receive 10 end-of-year payments of $9.4 million, or to receive 30 end-of-year payments of $5.4 million. If she thinks she can earn 7% percent annually, which should she choose? If she expects to earn 8% annually, which is the best choice? If she expects to earn 9%' ( explain well with important point ).

Kristina just won the lottery, and she mustchoose among three award options. She can elect to receive a lump sum today of $62 million, to receive 10 end-of-year payments of $9.5 million, or to receive 30 end-of-year payments of $5.6 million.a. If she thinks she can earn 7% annually, which should she choose?b. If she expects to earn 8% annually, which is the best choice?c. If she expects to earn 9% annually, which option would you recommend?d. Explain how interest rates influence her choice.

Gabrielle just won $2.7 million in the state lottery. She is given the option of receiving a of $1,200,000 now, or she can elect to receive $90,000 at the end of each of the next 30 years. If Gabrielle can earn 5% annually on her investments, which option should she take? If Gabrielle takes the prize as an annuity, the present value of the 30-year ordinary annuity is? Can you do it in an excel format?

Answer 2

Question

Chapter 5, Problem 21P

a.

Summary Introduction

To determine: The best option if Ms. C can earn 7% annually.

Lump Sum: It is a large amount of money paid on a single occasion instead of paying small amounts from time to time. The amount has been paid for the value of an asset or for other purposes of retirement.

b.

Summary Introduction

To determine: The best option, if Ms. C can earn 8% annually.

c.

Summary Introduction

To determine: The best option, if Ms. C can earn 9% annually.

d.

Summary Introduction

To explain: Reason for interest rate affecting choices.

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Answer 3

Question

Chapter 5, Problem 21P

a.

Summary Introduction

To determine: The best option if Ms. C can earn 7% annually.

Lump Sum: It is a large amount of money paid on a single occasion instead of paying small amounts from time to time. The amount has been paid for the value of an asset or for other purposes of retirement.

b.

Summary Introduction

To determine: The best option, if Ms. C can earn 8% annually.

c.

Summary Introduction

To determine: The best option, if Ms. C can earn 9% annually.

d.

Summary Introduction

To explain: Reason for interest rate affecting choices.

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Answer 4

Question

Chapter 5, Problem 21P

a.

Summary Introduction

To determine: The best option if Ms. C can earn 7% annually.

Lump Sum: It is a large amount of money paid on a single occasion instead of paying small amounts from time to time. The amount has been paid for the value of an asset or for other purposes of retirement.

b.

Summary Introduction

To determine: The best option, if Ms. C can earn 8% annually.

c.

Summary Introduction

To determine: The best option, if Ms. C can earn 9% annually.

d.

Summary Introduction

To explain: Reason for interest rate affecting choices.

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Answer 5

Chapter 5, Problem 21P

a.

Summary Introduction

To determine: The best option if Ms. C can earn 7% annually.

Lump Sum: It is a large amount of money paid on a single occasion instead of paying small amounts from time to time. The amount has been paid for the value of an asset or for other purposes of retirement.

b.

Summary Introduction

To determine: The best option, if Ms. C can earn 8% annually.

c.

Summary Introduction

To determine: The best option, if Ms. C can earn 9% annually.

d.

Summary Introduction

To explain: Reason for interest rate affecting choices.

Answer 6

Chapter 5, Problem 21P

a.

Summary Introduction

To determine: The best option if Ms. C can earn 7% annually.

Lump Sum: It is a large amount of money paid on a single occasion instead of paying small amounts from time to time. The amount has been paid for the value of an asset or for other purposes of retirement.

Answer 7

Chapter 5, Problem 21P

a.

Summary Introduction

To determine: The best option if Ms. C can earn 7% annually.

Lump Sum: It is a large amount of money paid on a single occasion instead of paying small amounts from time to time. The amount has been paid for the value of an asset or for other purposes of retirement.

Answer 8

b.

Summary Introduction

To determine: The best option, if Ms. C can earn 8% annually.

Answer 9

b.

Summary Introduction

To determine: The best option, if Ms. C can earn 8% annually.

Answer 10

c.

Summary Introduction

To determine: The best option, if Ms. C can earn 9% annually.

Answer 11

c.

Summary Introduction

To determine: The best option, if Ms. C can earn 9% annually.

Answer 12

d.

Summary Introduction

To explain: Reason for interest rate affecting choices.

Answer 13

d.

Summary Introduction

To explain: Reason for interest rate affecting choices.

Answer 14

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Ch. 5 - Prob. 1Q Ch. 5 - Explain whether the following statement is true or...Ch. 5 - If a firms earnings per share grew from 1 to 2...Ch. 5 - Would you rather have a savings account that pays...Ch. 5 - Prob. 5Q Ch. 5 - Prob. 6Q Ch. 5 - Banks and other lenders are required to disclose a...Ch. 5 - Prob. 8Q Ch. 5 - Prob. 1P Ch. 5 - Prob. 2P

The best option if Ms. C can earn 7% annually. Lump Sum: It is a large amount of money paid on a single occasion instead of paying small amounts from time to time. The amount has been paid for the value of an asset or for other purposes of retirement.

Solution Summary: The author explains how to determine the best option if Ms. C can earn 7% annually.

Concept explainers

To determine: The best option if Ms. C can earn 7% annually.

Lump Sum: It is a large amount of money paid on a single occasion instead of paying small amounts from time to time. The amount has been paid for the value of an asset or for other purposes of retirement.

To determine: The best option, if Ms. C can earn 8% annually.

To determine: The best option, if Ms. C can earn 9% annually.

To explain: Reason for interest rate affecting choices.

Chapter 5 Solutions

The best option if Ms. C can earn 7% annually. Lump Sum: It is a large amount of money paid on a single occasion instead of paying small amounts from time to time. The amount has been paid for the value of an asset or for other purposes of retirement.

Solution Summary: The author explains how to determine the best option if Ms. C can earn 7% annually.

Concept explainers

To determine: The best option if Ms. C can earn 7% annually. Lump Sum: It is a large amount of money paid on a single occasion instead of paying small amounts from time to time. The amount has been paid for the value of an asset or for other purposes of retirement.

To determine: The best option, if Ms. C can earn 8% annually.

To determine: The best option, if Ms. C can earn 9% annually.

To explain: Reason for interest rate affecting choices.

Chapter 5 Solutions

To determine: The best option if Ms. C can earn 7% annually.

Lump Sum: It is a large amount of money paid on a single occasion instead of paying small amounts from time to time. The amount has been paid for the value of an asset or for other purposes of retirement.