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LuckyWell [14K]
4 years ago
5

You have just won the lottery and will receive $460,000 in one year. You will receive payments for 27 years, and the payments wi

ll increase 3 percent per year. If the appropriate discount rate is 12 percent, what is the present value of your winnings?
Business
1 answer:
Zepler [3.9K]4 years ago
5 0

Answer:

The present Value of my winnings = $4,578,716.35

Explanation:

An annuity is a series od annual cash outflows or inflows which payable or receivable for a certain number of periods. If the annual cash flow is expected  to increase by a certain percentage yearly, it is called a growing annuity.

To work out the the present value of a growing annuity,

we the formula:

PV = A/(r-g) ×  (1-  (1+g/1+r)^n)

I will break out the formula into two parts to make the workings very clear to follow. So applying this formula, we can work out the present value of the growing annuity (winnings) as follows.

A/(r-g)

= 460,000/(12%-3%)

= $5,111,111.11

(1-  (1+g/1+r)^n

1 - (1+3%)/(1+12%)^(27)

=0.8958

PV = A/(r-g) ×  (1-  (1+g/1+r)^n)

$5,111,111.11 × $0.8958

= $4,578,716.35

The present Value of my winnings = $4,578,716.35

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Listed below are year-end account balances ($ in millions) taken from the records of Symphony Stores.
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Answer:

Explanation:

please find the attached for the full explanation of the answer.

before answering the total current assets that will be recorded by Symphony one needs to understand what a current asset is. A current asset  can be referred to a short term meaning that its span of life is short it can not be longer than 12 months hence current.

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During the current year, assets increased from $11,000 to $19,000, and liabilities decreased from $9,000 to $7,500. If no additi
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Answer:

$34,500

Explanation:

Calculation to determine total revenues for the year

Using this formula

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Let plug in the formula

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