Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Exercise 5-15 (Algo) Future and present value [ LO5-3, 5-7, 5-8] Answer each of the following independent questions. 1. You recently won a lottery and

image text in transcribedimage text in transcribed

Exercise 5-15 (Algo) Future and present value [ LO5-3, 5-7, 5-8] Answer each of the following independent questions. 1. You recently won a lottery and have the option of receiving one of the following three prizes: (1) $98,000 cash immediately, (2) $40,000 cash immediately and a six-year annual annuity of $9,900 beginning one year from today, or (3) a six-year annual annuity of $19,800 beginning one year from today. Assuming an interest rate of 6% compounded annually, determine the present value for the above options. Which option should you choose? 2. A company wants to accumulate a sum of money to repay certain debts due in the future. The company will make annual deposits of $200,000 into a special bank account at the end of each of 10 years. Assuming the bank account pays 6% interest compounded annually, what will be the fund balance after the last payment is made in ten years? Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and Complete this question by entering your answers in the tabs below. You recently won a lottery and have the option of receiving one of the following three prizes: (1) $98,000 cash immediately, (2) $40,000 cash immediately and a six-year annual annuity of $9,900 beginning one year from today, or (3) a six-year annual annuity of $19,800 beginning one year from today. Assuming an interest rate of 6% compounded annually, determine the present value for the above options. Which option should you choose? Note: Round your final answers to nearest whole dollar amount. Complete this question by entering your answers in the tabs below. A company wants to accumulate a sum of money to repay certain debts due in the future. The company will make annual deposits of $200,000 into a special bank account at the end of each of 10 years. Assuming the bank account pays 6% interest compounded annually, what will be the fund balance after the last payment is made in ten years? Note: Round your final answers to nearest whole dollar amount. Exercise 5-15 (Algo) Future and present value [ LO5-3, 5-7, 5-8] Answer each of the following independent questions. 1. You recently won a lottery and have the option of receiving one of the following three prizes: (1) $98,000 cash immediately, (2) $40,000 cash immediately and a six-year annual annuity of $9,900 beginning one year from today, or (3) a six-year annual annuity of $19,800 beginning one year from today. Assuming an interest rate of 6% compounded annually, determine the present value for the above options. Which option should you choose? 2. A company wants to accumulate a sum of money to repay certain debts due in the future. The company will make annual deposits of $200,000 into a special bank account at the end of each of 10 years. Assuming the bank account pays 6% interest compounded annually, what will be the fund balance after the last payment is made in ten years? Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and Complete this question by entering your answers in the tabs below. You recently won a lottery and have the option of receiving one of the following three prizes: (1) $98,000 cash immediately, (2) $40,000 cash immediately and a six-year annual annuity of $9,900 beginning one year from today, or (3) a six-year annual annuity of $19,800 beginning one year from today. Assuming an interest rate of 6% compounded annually, determine the present value for the above options. Which option should you choose? Note: Round your final answers to nearest whole dollar amount. Complete this question by entering your answers in the tabs below. A company wants to accumulate a sum of money to repay certain debts due in the future. The company will make annual deposits of $200,000 into a special bank account at the end of each of 10 years. Assuming the bank account pays 6% interest compounded annually, what will be the fund balance after the last payment is made in ten years? Note: Round your final answers to nearest whole dollar amount

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

If Youre So Smart Why Arent You Rich A Guide To Investing Fundamentals

Authors: Ben S. Branch

1st Edition

0275990281, 978-0275990282

More Books

Students also viewed these Finance questions