Exercise 12A-6 Basic Present Value Concepts (L012-7) The Caldwell Herald newspaper reported the following story, Frank Ormsby of Caldwell is the state's newest millionaire. By choosing the six winning numbers on last week's state lottery, Mr. Ormsby won the week's grand prize totaling $1.14 million. The State Lottery Commission indicated that Mr. Ormsby will receive his prize in 20 annual installments of $57,000 each Click here to view Exhibit 123.1 and Exhibit 128-2. to determine the appropriate discount factor(s) using tables Required: 1. If Mt. Ormsby can invest money at a 10% rate of return, what is the present value of his winnings? (Enter your answer in dollars and not in millions of dollars.) Present value BOHIBIT 128-1 Present Value of t Periods 4 5 6 % 8 9% 10% 11% 12% 0% 9% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 1 0962 0952 0943 095 0926 0917 0909 0901 089 088 0877 0870 0.862 0855 08470840 033 0826 0820 081 0806 0800 2 095 0907 0990 073 0857 0842 0826 0812 0797 0783 079 0756 073 0731 078 0706 0694 0583 0672 0661 0650 0540 1 089 0854 080 081 0794 0772 0751 0731 07120693 0675 0658 0641 0624 0609 0593 0579 0564 0551 0537 0524 0512 4 0855 0823 0792 0763 0735 0708 0683 0659 0636 0613 0592 0572 0.552 0534 05160499 042 04670451 0437 0.423 0410 5 0872 0784 0747 0713 0681 0650 0621 0593 0.567 0543 0.519 0497 0.476 0456 0437 0419 0402 0.386 0370 0.355 0341 0328 6 0790 016 0705 0666 0630 0596 0564 0535 0507 04800456 032 0410 00 0370 0352 0335 0319 0303 0289 0775 0262 7 070 071 0665 0523 0583 057 050 04820452 0425 0400 0376 0354 0.313 0.3140296 0279 0263 0249 0235 072 0210 0731 0677 0527 052 0540 0502 04670434 0404 0376 0.351 0377 0305 0285 0256 0249 0233 0218 02040191 01790168 07030645 0.592 054 0500 0 460 0424 0.391 0.361 0333 0.308 0284 0.263 0243 0225 0209 0194 0180 0167 0155 014 0134 10 0676 064 0558 0508 0463 0.422 0386 0352 0322 0295 0270 0247 0227 0208 0.191 0176 0162 0.149 01370126 0116 0107 11 0650 0585 05275 0429 0.388 0350 0.317 0287 0261 0237 02150195 0178 0162 080135 01230120103 0094 0086 12 055 0557 0497 000 1970356 0319 0286 0257 0231 0208 017 0168 0152 01370124 012 0102 0092 008 0076 0069 1 05010570 069 0415036801360290 028 029 0204 01R) 086) 05 010 016 0040093 0084 00750068 00510055 0577 0505 062 ORA 0340 0299 0263 0232 0205 01810160 0141 0125 0110099 0088 0.078 0069 0062 0.055 0049 0044 15 0555 0481 0.417 0 2 0.315 0275 0239 0209 0183 0160014001230108 009 0084 0074 0065 0057 0051 0045 0.0400035 15 050458 014 010 0292 0252 02180188080410101070093 008 007 0062 0054 0047 0042 0035 0032 0028 17 0511 045 07070770 020 012004601250108 0091 000 000 000 0052 0045 0039 004 0030 0026 0023 18 044 0450100700750 0212 001530100 0095 00 00 00 005 004 00 00320028 00240021 0098 1904 1903 0271 0232 09406401380 0008 0083 000 0000 00510000037 001 0027 0023 0020 001001 200456 03770120258 02150178 0901240104 0087 007 0061 0051 004 00370031 0026 0022 0010 0010010012 21 040 01 020202 010000 0112 0001 0077 0064 005 004 0000 0026 0022 001800150010010009 22 04220202780226 0109500000000068 000016 0000250022 009 00150011001100000001 23 000500252 0101000100014 000 000 000 0033 00022 000 001500100100009 DOO 0006 24 0300 000 0247 OM 0158 0126 0002 0082 000 oos oot oon 0028 0.02 oon oors 0.013 ooo oooo 0007 0006 0.005 25 075 025 0233 014 014601600820074 005 0047 002 00300024 0020 001 000 000 000 000 000 0005 0004 26 03 02 0220 0170115 084 0066 002 0031 0026 0021 0010010011 000 0002 000 000 000 000 27 0302020207 036 0125 0000000600047007002900200000 000000100000000000000002 0 01001000054 003 0026000000000000000005 00000000020002 20 1 70823 00 01 02 0022001100100100080006 0005 004 0 00000020002 303 02 0110010 0075 0057 0044 0026 0.020 001 0012 000 000 000 0004 0003000300020002 0001 400208020097 000 0000 002 0015 0010 0005 004 000 000 000 000 000 0000 0000 0000 0000 0000 2 DOUBT 122-2 Present Value of an Annuity of $1 in Areas: [:- ] Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 245 25% 09620952 094 0935 09260917 0909 0901 0893 0885 0877 08700862 0855 0847 0.840 083 0826 0820 0813 0806 0800 1885 1859 1833 1808 1783 1759 1736 173 1690 1668 1647 1626 1605 1585 1566 1547 1528 1509 1492 1474 1457 1400 2775 2723 2673 2624 257 258 2487 244 2402 2361 2322 223 2246 2210 2114 2100 2106 2074 2012 2011 1981 1952 3.630354634653387 3312 3.200 3.170 3102 3037 294 2914 2855 275 270 2690 2539 259 2.540 241 2478 2404 2362 4452 43294212 4100 39933890 3.791 3696 3.605 3.517 3.433 3352 3274 3199 3.127 3058 2591 2926 2864 2803 2745 2689 5205076 491 467 4623 4686 4355 4231 4111 3998 3.889 3784 3685 3.589 3498 3.6103325 324531673092 3020 2951 60025786 55825395205 5033 4868 4724566 4423 42884604039 3922 3812 370636053508 341 3327 3242 3161 67335653 6210 597 570) 5535 535 S 968 47994639 201408 3954383237263519 351836213329 745 7108580255155247 995 5759 5537 5378 5132 49464m 4601 4451 4303 4 0313905 376 367335663.663 811171727360 7024 6710 5418 615 5889 5650 546 5.216 5019 4833 4659 4494 433941924054 973 799 368) 3571 11 0 3 787 7499 79 805 5695 6201 595x50535734 502 656 6 4327 4774035190237153556 52683750 75 765 661 SS501 5974061778 407 79551 15 3 9 885131587904747 73 6750 GO 512 551 5 51491071525330362 020 01912 1720 0561 999992957458241 2786716769826000 6002 57245485229 58402 4611243242554039282 15 1 0 9712 9 55076067091641202 652 847 575 5724 5092 47626756941151157100185 0 274 6411975391223022711206720 56541552229047545 0 503910 6100059931220170212060671255545211512049423003928 15 11 1081115433336611500577 55505 4 5004434635 4442420340971147 20 20211401295196703715553 51014050206 XXXS 316
