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barxatty [35]
3 years ago
15

A lottery claims its grand prize is ​$15 ​million, payable over 5 years at ​$3000000 per year. If the first payment is made​ imm

ediately, what is the grand prize really​ worth? Use an interest rate of 8​%.
Business
1 answer:
xz_007 [3.2K]3 years ago
3 0

Answer:

$ 11, 978,133.75

Explanation:

The grand prize of 15,000,000 is worth the present value of the prize at an 8% interest. The prize is paid every year, meaning its an annuity case.

The present value of an annuity is calculated using the formula

PV = P × <u> 1 − (1+r)−n </u>

  r

Where

P $3,000,000

r is 8% 0r 0.08

n is 5

PV = $3,000,000 x <u>1-(1+0.08) - 5</u>

    0.08

PV =$3,000,000 x<u> 1 - 0. 6805831</u>

    0.08

PV = $ 3,000, 000  x 3.99271

PV = 11, 978,133.75

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The balance in Discount on Bonds Payable that is applicable to bonds due in three years would be reported on the balance sheet i
tankabanditka [31]

The balance in Discount on Bonds Payable that is applicable to bonds due in three years would be reported on the balance sheet in the section entitled of Long-term liabilities.

What is Long-term liabilities?

Long-term liabilities can be regarded as loans aa well as other financial obligations that the repayment schedule would be expected to last over a year.

Some of the examples long-term liabilities are;

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It should be noted that balance in Discount on Bonds Payable that has a due time of three years would be reported at Long-term liabilities section.

Learn more about Long-term liabilities at:brainly.com/question/25596583

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A customer who is long 1 oex may 315 call exercises the contract on this day. the customer will receive:________
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A customer who is long 1 OEX may 315 call exercises the contract on this day. the customer will receive $58.00. Option A

This is further explained below.

<h3>What is called exercises?</h3>

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