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5. (a)What is the present value of $1,000,000 to be received 10 years from now, with interest compound- ed at 15% annually? (b), what is
5. (a)What is the present value of $1,000,000 to be received 10 years from now, with interest compound- ed at 15% annually? (b), what is the present value of an annuity of $10,000 for 5 years at 12%? (c) How much cash would you necd to invest in a moncy market account today in order to have $8,000 at the end of4 years? Assume interest rates are 6%. (d). How much cash would you nced to invest in a money market account today in order to be able to with-draw $8,000 per year at the end of each of the next 4 years? Assume interest rates are 6%. (c) Assume you won the grand prize in a sweepstakes. Would it be better to take your prize in $100,000 payments each year over the next 10 years or $600,000 now? Interest rates are 10%
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