Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Business Management Expert

Management Studies


Home >> Business Management

You have a winning lottery ticket for $100,000. You never will get the full $100,000. The State offers you three options. The first pays you $80,000 up front for the entire amount. The second pays you the winnings over a three-year period. The last option pays you a large payment today with small payments in the future. The payment options are detailed in the table below: (a) Calculate the present value of each payment option, assuming the interest rate is 12%. (b) Then, calculate the present values based on an interest rate of 5%. (c) Compare your answers and explain why they are different when the interest rate changes.

Amount paid today

80000

22000

50000

Amount paid after 1 year

0

22000

12000

Amount paid after 2 years

0

22000

12000

Amount paid after 3 years

0

22000

12000

Please show work and type answer.

Business Management, Management Studies

  • Category:- Business Management
  • Reference No.:- M92177944
  • Price:- $10

Priced at Now at $10, Verified Solution

Have any Question?


Related Questions in Business Management

Joe and pete are roommates and computer consultants in

Joe and Pete are roommates and computer consultants. In order to save money, both Joe and Pete share the same computer. Even though they are both in their forties, they spend a lot of time discussing having sex with high ...

Watch the plan do check act cycle by dr rich schuttler and

Watch The Plan, Do, Check, Act Cycle by Dr. Rich Schuttler and What Is DMAIC? In your initial post, discuss how DMAIC compares with the PCDA cycle. Are they both well suited for use in manufacturing and service operation ...

How can educating help solve the health and poverty issues

How can educating help solve the health and poverty issues in Ethiopia, Africa? How can social development be established?

When using todays digital cameras file sizes are often

When using today's digital cameras file sizes are often saved in a format that is well over 1 Megabyte. This may be great for high definition photo reproductions but is a disaster for uploading to the web. Images on your ...

How can i find charts that show total cost and output

How can I find charts that show total cost and output relationship for companies with high fixed low variable cost and for companies with low fixed and high variable cost

Explain how amazon and walmart companies use information

Explain how Amazon and Walmart companies use Information and Communication Technologies (ICT) in their competitive strategies. Highlight the differences in their use of ICT.

Which of the listed qualities of leaders and managers did

Which of the listed qualities of leaders and managers did the nurse manager display? Which behaviors? Which ones did the nurse manager not display?

A production process operates in one of two states the

A production process operates in one of two states: the in-control state, in which most of the units produced conform to specifications, and an out-of control state, in which most of the units produced are defective. The ...

A very important client bob is in town and his expenses are

A very important client, Bob, is in town and his expenses are being covered by XYZ company. This client controls a large portion (over 50%) of the business XYZ company does each year. When he submits his expense report, ...

Do you all think that fear of retaliation may affect

Do you all think that fear of "retaliation" may affect decisions by individuals in today's health care organizations? Do you all think that some of the specialized areas of expertise i.e. surgical areas, may have some in ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As

Follow Us

© Copyright 2013-14 mywordsolution.com All rights reserved