Question
Below is a few questions I need explantions for, answers are helpful but not relevant, I know there are formulas for these but I am
Below is a few questions I need explantions for, answers are helpful but not relevant, I know there are formulas for these but I am away from my textbook. Thanks inadvance.
A. Mr. Jones just won a lottery prize that will pay him $5,000 a year for thirty years. If Mr. Jones can earn 5 percent on his money, what are his winnings worth to him today?
B. A preferred stock pays an annual dividend of $5. If you want to earn 11 percent on this investment, what is the maximum amount you should pay to purchase one share of this stock today?
C. Your parents would like to establish a trust fund that would pay annual payments to you of $50,000 a year forever. The fund will earn a guaranteed return of 8 percent. How much do your parents need to deposit into this trust fund today to achieve their goal?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started