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I need help with part e. 8. A group of college students won a record Powerball jackpot of $423 million. The group had 2 choices:
I need help with part e.
8. A group of college students won a record Powerball jackpot of $423 million. The group had 2 choices: A) Receive 30 beginning of the year payments of 14.1 million each B) Receive a lump sum payment today of $211.5 million immediately a. Find the FV (at the end of year 30 ) of the two cloices assuming interest rate is 11% ? Which choice should the group select? b. Find the PV of the two choices assuming interest rate is 11%. Which choice should the group select? c. Find the FV (at the end of year 30 ) for the two choices assuming interest is 4%. Which choice should the group select? d. Find the PV of the two choices assuming interest rate is 4%. Which choice should the group select? e. Find the interest rate at which the winner will be indifferent between the two choices (hint: find the interest at which the sum of the PV of all the cash flows from choice A equals to the lump sum for Choice B) (12 points) Step by Step Solution
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