FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have just won the initial school finance lottery! you have won $20,000 today, $20,000 five years from today, and $60,000 10 years from today.

You have just won the initial school finance lottery! you have won $20,000 today, $20,000 five years from today, and $60,000 10 years from today. As an alternative, you can receive your winnings as a 10-year annuity with the first payment received five years from today. 


If you require a 6% return on your investment, how much must the annuity pay you each year for you to select that option ?

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

Fundamentals of corporate finance

Fundamentals of corporate finance

Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan

9th edition

978-0077459451, 77459458, 978-1259027628, 1259027627, 978-0073382395

More Books

Students also viewed these Finance questions

Question

★★★★★
1. Suppose a US Treasury bond will pay $2,500 five years from now. If the current interest rate on the 5-year Treasury bond is 4.25%, how much is the bond worth today? 2. Five years ago, Greenery...

Answered: 1 week ago

Question

★★★★★
An instrument with maturity period of 15 years was held by Mr. Taylor (a non-resident citizen) for 3 years and transferred to Mr. Edward (a resident alien). Mr. Edward held It for 2 years before...

Answered: 1 week ago

Question

★★★★★
If sec + tan = p, prove that sin = p 2 - 1/p 2 +1

Answered: 1 week ago

Question

★★★★★
Engineers observe that about 90% of graphite samples fracture within five hours when subjected to a certain stress. (a) If the time to fracture is modeled with an exponential distribution, what would...

Answered: 1 week ago

Question

★★★★★
By using Social Security Administration data for selected years from 1950 and projected to 2050, the additional years of life expectancy at age 65 can be modeled by L(y) = - 14.6 + 7.10 ln y where y...

Answered: 1 week ago

Question

★★★★★
The authors of the paper Flat-footedness is Not a Disadvantage for Athletic Performance in Children Aged 11 to 15 Years (Pediatrics [2009]: e386e392) studied the relationship between y 5 arch height...

Answered: 1 week ago

Question

★★★★★
=+a) Write the null and alternative hypotheses.

Answered: 1 week ago

Question

★★★★★
In an attempt to identify ecologically friendly methods for controlling mosquito populations, researchers conducted eld experiments in India where aquatic nymphs of the dragony Brachytron pretense...

Answered: 1 week ago

Question

★★★★★
PART 2 Hint: you do not need to know how to read a file. Please use getchar) to obtain the input.] 4) (2 points) Write a single line shell command to run the C program above and remove all words "a"...

Answered: 1 week ago

Question

★★★★★
Nathan is married with two children and has AGI of $405,000. He also has the following AMT adjustments and preferences: Itemized deductions: medical after floor:$5,375 regular tax taxes: $34,354...

Answered: 1 week ago

Question

★★★★★
If a test has been properly validated, legally it: a} may be used provided it does not discriminate among candidates b}. .may be used provided it does not create disparate impact. c}. may be used to...

Answered: 1 week ago

Question

★★★★★
Coffee-cup Corporation received an invoice on May 2, 2012, stating the discount terms as 2/10, n/30. The company settled the invoice amount by paying $1,470 on May 10, 2012. What is the amount of...

Answered: 1 week ago

Question

★★★★★
1.Mr. John Foret is 42 years old and divorced from his wife. His Net Income For Tax Purposes consists of rental income. He has retained the family home and both of the children of the marriage live...

Answered: 1 week ago

Question

★★★★★
A parachute company sells safety devices that are designed to fire, releasing the reserve parachute, at a mean height of 335.2 m with a standard deviation of 12.1 m. The company recently updated the...

Answered: 1 week ago

Question

★★★★★
1. Although Apples inbound logistics began with Apple controlling the assembly of its computers, it shifted to having suppliers acquire raw materials with contract manufacturers handling most of the...

Answered: 1 week ago

Question

★★★★★
Compose two (2) pieces of academic writing on the following questions. Responses should be 800 words each and have a short introduction, body, and a short conclusion. Research Task 1 What are the...

Answered: 1 week ago

Question

★★★★★
Pina Colada Corp, uses a periodic inventory system. Its records show the following for the month of May, in which 79 units were sold. Date Explanation Units Unit Cost Total Cost May 1 Inventory 30 $9...

Answered: 1 week ago

Question

★★★★★
Currently, there are five concepts of food stands, including: hot dogs, soft pretzels, turkey legs, sandwich wraps, and funnel cakes. This approach will double the existing number of food stands...

Answered: 1 week ago

Question

★★★★★
a. Is maximizing disbursement float a sound business practice? b. What is a zero-balance account? What is the advantage of such an account?

Answered: 1 week ago

Question

★★★★★
A project has the following estimated data: price = $57 per unit; variable costs = $32 per unit; fixed costs = $9,000; required return = 12 percent; initial investment = $18,000; life = four years....

Answered: 1 week ago

Question

★★★★★
In the previous problem, suppose fixed costs are $130,000. What is the operating cash flow at 58,000 units? The degree of operating leverage?

Answered: 1 week ago

Question

★★★★★
Of all customers purchasing automatic garage-door openers, 75% purchase a chain-driven model. Let number among the next 15 purchasers who select the chain-driven model. a. What is the pmf of X? b....

Answered: 1 week ago

Question

★★★★★
According to the article Characterizing the Severity and Risk of Drought in the Poudre River, Colorado (J. of Water Res. Planning and Mgmnt., 2005: 383393), the drought X 5 the total number X 5 the...

Answered: 1 week ago

Question

★★★★★
a. Show that . b. Show that . [Hint: At most x Ss is equivalent to at least Fs.] c. What do parts (a) and (b) imply about the necessity of including values of p greater than .5 in Appendix Table A.1?

Answered: 1 week ago

Previous Question Next Question