Question
1. You just won the state lottery. One option to receive your winnings is to take 20 annual payments of $25,000. Another option is to
1. You just won the state lottery. One option to receive your winnings is to take 20 annual payments of $25,000. Another option is to take a lump sum payment today (discounted at an interest rate of 6%). What is the lump sum amount today?
A. $286,748
B. $500,000
C. $25,000
D. $188,659
2. Calculate the present value of $100,000 using an annual interest rate of 8% over a period of 10 years, assuming semi-annual compounding.
A. $42,358
B. $51,685
C. $45,639
D. $100,000
3. The following data were reported by a corporation: Authorized shares 30,000
Issued shares 20,000
Treasury shares 2,000
The number of outstanding shares is: A. 12,000. B. 15,000. C. 17,000. D. 20,000. E. 18,000.
4. You are planning to take a major vacation 7 years from now. You deposit $3,000 in the bank today earning an 6% rate of return compounded semi-annually. How much will you have in your account 7 years from now when you go on your vacation? (hint: calculate future value
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