Problemthe lotterys million dollar payout provides 1, Ask an Expert

Accounting

Problem:

The lottery's million dollar payout provides 1 million to be paid over 19 years in 20 payments of $50,000. The first $50,000 is paid immediately, and the remaining 19 $50,000 dollar payments occur at the end of each of the next 19 years.

Required:

Question: If 10 percent is the appropriate discount rate, what is the present value of this stream of cash flows? If 20% is the appropriate discount rate, what is the present value of the cash flows?

Note: Explain in detail.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91169272

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