You just won a state lottery! The lottery offers you a choice: you may choose a lump sum today, or $89 million in 26 equal annual installments at the end of each year. Assume the funds can be invested (yield) at an annual rate of 7.65%. What is the lump sum that would equal the present value of the annual installments

Answers

Answer 1

Answer:

the lump sum that would equal the present value of the annual installments is $38,163,612

Explanation:

The computation of the lumspum amount is as follows;

= Cash flow × (1 - (1 + rate of interest)^-number of years) ÷ rate of interest)

= $89 million × (1 - (1 + 0.0765)^-26) ÷ 0.0765)

= $38,163,612

Hence, the lump sum that would equal the present value of the annual installments is $38,163,612

Therefore the above is calculated by applying the given formula


Related Questions

Stacy wants to run reports that tell her which vendors provide the best prices on the products she sells.

Answers

Answer: Create bill with product/service items > pay bills

-Create expense with product / service items

Explanation:

Here's the complete question:

Stacy wants to be able to run reports in QuickBooks online that will tell her which vendors provide the best prices on the products she sells. Which two Vendor workflows will enable her to create a report with his data?

QuickBook is an accounting software typically used by small and medium sized businesses which typically perform payroll functions, accept business payments, and pay bills.

Based on the scenario in the question, the vendor workflows that will enable her to create a report with his data include:

• Create bill with product/service items > pay bills

• Create expense with product / service items

During 2009, the U.S. federal government shut off the water to a huge section of farmland in the California Central Valley to save the endangered Delta smelt fish. As a result of that action, 600,000 of acres of good farmland turned into desert land, about 20,000 farm jobs were lost, and almost 1,000 farmers were put out of business. Conclusion: This is a good example of government trying to create a positive externality.

a. True
b. False

Answers

Answer:

false

Explanation:

A good has positive externality if the benefits to third parties not involved in production is greater than the cost. an example of an activity that generates positive externality is research and development. Due to the high cost of R & D, they are usually under-produced. Government can encourage the production of activities that generate positive externality by granting subsidies.

The actions of the government had negative effects on third parties (farmers and businesses). This is an example of negative externality

A good has negative externality if the costs to third parties not involved in production is greater than the benefits.

A stock has an expected return of 13.2 percent, the risk-free rate is 8.5 percent, and the market risk premium is 10 percent. What must the beta of this stock be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answers

Answer: 47% or 0.47

Explanation:

From the question, we are told that the stock has an expected return of 13.2 percent, the risk-free rate is 8.5 percent, and the market risk premium is 10 percent.

We should note that the expected return is calculated as:

= Risk free rate + beta × market risk premium

Therefore,

13.2% = 8.5% + beta × 10%

0.132 = 0.085 + beta × 0.1

Beta = (0.132 - 0.085) / 0.1

Beta = 0.047 / 0.1

Beta = 0.47

Beta = 47%

Suppose the real rate is 3.2 percent and the inflation rate is 4.8 percent. What rate would you expect to see on a Treasury bill

Answers

Answer:

The rate that can be expected on a Treasury bill is 5.41%.

Explanation:

As per Fisher's equation:

Nominal rate = (1 + Real rate) * (1 + Inflation rate) - 1

Nominal rate = (1 + 0.0365) * (1 + 0.017) - 1

Nominal rate = 5.41%

PLEASE GIVE THANKS AND RATING FOR MY HARDWORK :)

Pumpkin Corporation purchased land on January 1, 20X6, for $50,000. On July 15, 20X8, it sold the land to its subsidiary, Spice Corporation, for $70,000. Pumpkin owns 80 percent of Spice's voting shares. Based on the preceding information, what will be the worksheet consolidating entry to remove the effects of the intercompany sale of land in preparing the consolidated financial statements for 20X8?


a. Gain on Sale of Land 20,000
Land 20,000

b. Gain on Sale of Land 16,000
Land 16,000

c. Land 16,000
Gain on Sale of Land 16,000

d. Land 20,000
Gain on Sale of Land 20,000

Answers

Answer:

a. Gain on Sale of Land                          20,000

       Land                                                                    20,000

Explanation:

The Gain on Sale of land account should be debited by the gain received to remove the effects from the statements as the account had been credited.

The Land account should likewise be credited as the gain had been debited to it. Crediting it would therefore remove the effects of the sale of the land.

Difference = 70,000 - 50,000

= $20,000

The image shows a performance graph.


A graph titled Relationship between Anxiety and Performance. X axis is labeled Anxiety with an arrow pointing right labeled None at left and Extreme at right. Y axis is labeled performance with an arrow pointing up labeled Poor at bottom and Excellent at top. A line forms an arch starting at Poor/none at left, rising to excellent in the middle, and ending at poor/extreme at right.

Which is the best interpretation of the graph?


A small amount of anxiety is not enough to help students perform better on a test.

The higher a student’s anxiety, the greater the probability of a good test score.

A small amount of anxiety can help students perform better on tests.

The higher a student’s anxiety, the lower the likelihood of overcoming it.

please answer correctly ..... or my face will look like this 0-0 and then i will say bruhhh

Answers

Answer:

C.

Explanation:

just got it right on Edge

Considering the available options and the graph image, the best interpretation of the graph is that "a small amount of anxiety can help students perform better on tests."

This is evident in the fact that at the middle of anxiety rating, that is where there is the highest performance.

While at the lowest and highest anxiety level, the performance was at a lower level.

Hence, in this case, it is concluded that the correct answer is option C. "A small amount of anxiety can help students perform better on tests."

Learn more about anxiety here: https://brainly.com/question/2101302

What type of inventory does paint that has been colored but not yet put into cans represent for a paint company

Answers

Answer:

Work in process inventory

Explanation:

Work in process inventory is made up of those goods that are partially completed in the production process.

The various stages inventory goes through are raw material inventory, work in process inventory, and finished goods inventory.

When some work has already been done on the raw material but it is not ready to leave the production process this is work in process.

This is exemplified in the given scenario where paint has been colored but not yet put into cans.

Harold Manufacturing produces denim clothing. This year, it produced 5,230 denim jackets at a manufacturing cost of $41.00 each. These jackets were damaged in the warehouse during storage. Management investigated the matter and identified three alternatives for these jackets.



1. Jackets can be sold to a second-hand clothing shop for $7.00 each.
2. Jackets can be disassembled at a cost of $32,000 and sold to a recycler for $13.00 each.
3.
Jackets can be reworked and turned into good jackets. However, with the damage, management estimates it will be able to assemble the good parts of the 5,230 jackets into only 3,100 jackets. The remaining pieces of fabric will be discarded. The cost of reworking the jackets will be $103,000, but the jackets can then be sold for their regular price of $45.00 each.



Required:
1.
Calculate the incremental income.

Alternative 1 Sell to a second-hand shop Alternative 2 Disassemble and sell to a recycler Alternative 3 Rework and sell at regular prices
Incremental revenue
Incremental costs
Incremental income

Answers

Answer:

the best option is number 1, sell the jackets to a secondhand store at $7 will yield $36,610 in profits

Explanation:

the previous manufacturing costs can be considered sunk costs because they  cannot be recovered, so we must analyze the options to determine which one yields the highest profit.

option 1

sell 5,230 jackets to secondhand stores at $7 each, profit = $36,610

option 2

disassemble the jackets and sell them at $12 each, profit = $67,990 - $32,000 (disassembling costs) =  $35,990

option 3

rework the jackets, profit = ($45 x 3,100) - $103,000 = $36,500

the best option is number 1, sell the jackets to a secondhand store at $7 will yield $36,610 in profits

Mason buys real estate for $1,937,000 and lists ownership as follows: Mason and Dana, joint tenants with the right of survivorship. Mason dies first, when the real estate is valued at $2,518,100. How much is included in Masons gross estate if Mason and Dana are (a) brother and sister and (b) husband and wife

Answers

Answer:

a. $2,518,100

b.  $1,259,050

Explanation:

The computation is shown below:

a. As a brother and wife whole amount is to be involved i.e. $2,518,100 in the gross estate

b. And as a husband and wife only half amount of real estate is involved as Mason is died

So the half amount would be

= $2,518,100 ÷ 2

= $1,259,050

Judy, a single individual, reports the following items of income and loss: Salary $120,000 Loss from rental property (40,000) Judy owns 100% of the rental property and actively participates in the rental of the property. Calculate Judy's AGI (15).

Answers

Answer: Judy's AGI is $105,000

Explanation:

Given that;

(income) Salary $120,000

Loss from rental property (40,000)

Now as per 2020 IRS TAX law; we know that;

maximum allowance for loss from rental property in case of active participants is twenty five thousand dollar ($25,000)

Also amount of Gross income in excess of one hundred thousand dollar ($100,000)  up to one hundred and fifty thousand dollar ($150,000) is subject to fifty percent (50%) deduction from the loss from rental property

this twenty five thousand dollar ($25,000) is deductible if one has Gross Income of one hundred and fifty thousand dollar ($150,000)

now lets calculate Judy's AGI

AGI before deductions = $120,000

Real estate exception = [$25,000 - ($120,000 - 100,000)×50%]

= $25,000 - $2000×0.5

= ($25,000 - $10,000)

Real estate exception = $15,000

so

AGI =  AGI before deductions - Real estate exception

AGI = $120,000  - $15,000

AGI = $105,000

therefore Judy's AGI is $105,000

Macroeconomic indicators (measuring output, income, prices, and unemployment)

Answers

What are we answering exactly. I’m sorry

Lee purchased stock with an initial share price of $32, and sold it when the share price was $50. While he owned the stock, he earned $2 in dividends. What was his total percentage return on the investment

Answers

Answer: 66.7%

Explanation:

His return on the stock is;

= (New price - Old price + dividends) / Old price

= (50 - 32 + 2) / 32

= 20/ 32

= 66.7%

All of the groups that have an interest in an organization's success and outcomes are known as the organization's

A) Investors
B) Agencies
C) Shareholders
D) Stakeholders

Answers

Answer:

D) Stakeholders

Explanation:

A stakeholder is any person, firm, or group that has an interest in the performance of a project, event, or institution. Stakeholders are affected in one way or another by the outcome of an event or process.  For a business organization, stakeholders are the people likely to incur losses or benefits depending on its financial performance. They include employees, investors, suppliers, shareholders, the government, and management.

The risk that a bank will receive less interest from a lending product than it originally anticipated is known as __________.

Answers

I think the best answers would be Interest rate risk. Interest rate risk is the potential for investment losses that result in a change in interest rates.

The risk that a bank will receive less interest from a lending product than it originally anticipated is known as interest rate risk. Hence, Option (A) is correct.

Interest rate risk refers to the potential for a bank to receive less interest from a lending product than it initially expected due to changes in interest rates.

When a bank lends money, it typically sets an interest rate based on current market conditions.

However, if interest rates decrease, borrowers may have an incentive to refinance their loans at lower rates, resulting in the bank receiving less interest income than anticipated.

Conversely, if interest rates increase, borrowers may be less likely to borrow, which can also lead to lower interest income for the bank.

Thus, interest rate risk is a significant concern for banks as it can impact their profitability and overall financial performance.

Learn more about the interest rate here:

https://brainly.com/question/29051555

#SPJ2

The risk that a bank will receive less interest from a lending product than it originally anticipated is known as __________.

a)interest rate risk

b)operational risk

c)prepayment risk

d)market risk

The total amount paid by a borrower to a lender for the use of credit?

Answers

Answer:

Finance charge

Explanation:

The finance charge represents the total of all costs associated with borrowing money. It includes charges such as the interest, penalties, application fee, insurance on the loan, and any other fees that a lender may impose on the borrower.

While interest is the cost of borrowing money, it is not the only fee for a borrower to obtain credit. The finance charge allows lenders to make profits on the funds they extend to borrowers.

The __ tests various scenarios by entering spreadsheet data to recalculate formulas and see the impact of proposed changes

Answers

Answer:

What-if Analysis

Explanation:

The what-if analysis is the process for value changes that shows how those changes would impact the formulas in the given sheet. It comprises of the scenarios, goal seek and the data tables

In this test if the data is entered so it again calculated the formulas in order to see the changes made in the given sheet

Hence, the same is to be considered  

What is the present value of a cash flow in the amount of $1,000 that occurs today, if the discount rate is 10%

Answers

Answer:

the present value is $1,000

Explanation:

The computation of the present value of the cash flow today is as follows:

Given that

Cash Flow, Today = $1,000

Discount Rate = 10%

Based on the above information

Present Value = Cash Flow Today = $1,000

It means that the present value should be equivalent to the cash flow today

hence, the same is to be considered

Therefore the present value is $1,000

Given a prior forecast demand value of 1,100, a related actual demand value of 1,000, and a smoothing constant alpha of 0.3, what is the exponential smoothing forecast value

Answers

Answer:

1,030

Explanation:

Calculation for what is the exponential smoothing forecast value

Exponential smoothing forecast value = 1,000 + 0.3 x (1,100-1,000)

Exponential smoothing forecast value = 1,000 + 0.3 x (100)

Exponential smoothing forecast value = 1,000 + 30

Exponential smoothing forecast value= 1,030

Therefore the exponential smoothing forecast value will be 1,030

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