The preferred gig is the first one since its today's worth is greater than the today's value of the second gig
What is the today's worth of $5000 each year?
The worth of the second gig, which pays $5000 every year for the next 6 years in today's dollar is the present value of all the six annual cash flows discounted using the present value formula of an ordinary annuity as shown below:
PV=PMT*(1-(1+r)^-N/r
PV=present value of annual payments for 6 years=unknown
PMT=annual payment=$5000
r=required return=discount rate=8%
N=number of annual cash flows=6
PV=$5000*(1-(1+8%)^-6/8%
PV=$5000*(1-(1.08)^-6/0.08
PV=$5000*(1-0.630169626883105)/0.08
PV=$5000*0.369830373116895
/0.08
PV=$23,114.40
The fact that the present value of the second option which pays $5000 annually is lesser than the amount receivable immediately, which is $25,000, hence, the first gig is preferred
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Answer:
Step-by-step explanation:
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First we will find the difference between the first two fractions
1/8-1/16=
here the common dinominator is 16 so we will get the following out of the subtraction
1/8-1/16=1/16
D=1/16
to get the next three, we will just add the difference to the previous fraction to get the next fraction.
so our pattern will be 1/16, 1/8, 3/16, 1/4, 5/16, 3/8, 7/16
Answer:
10
Step-by-step explanation:
4 1/2 + 11/2
= 9/2 + 11/2
= 20/2
= 10
The first nine is in the millions place so the value is 9 million.
