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andreyandreev [35.5K]
3 years ago
13

You have just won the lottery and will receive $530,000 in one year. You will receive payments for 25 years, and the payments wi

ll increase 4 percent per year. If the appropriate discount rate is 10 percent, what is the present value of your winnings
Business
1 answer:
polet [3.4K]3 years ago
7 0

Answer:

Present value= $3,642,651.54

Explanation:

Giving the following information:

You have just won the lottery and will receive $530,000 in one year. You will receive payments for 25 years, and the payments will increase by 4 percent per year. The appropriate discount rate is 10 percent.

First, we need to calculate the final value using the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual payment= 530,000

i= 0.04 + 0.10= 0.14

n= 25

FV= {530,000*[(1.14^25)-1]}/0.14

FV= 96,391,538.43

Now, we can calculate the present value:

PV= FV/(1+i)^n

PV= 96,391,538.43/ (1.14^25)

PV= $3,642,651.54

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Cassie has three criteria for her career. She would like to make at least $60,000 a year at the height of her career. She would
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New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect. Maloney's, Inc
VLD [36.1K]

Answer:

The WACC is 11.64%

Explanation:

The weighted average cost of capital or WACC is the cost to firm of raising its total capital based on its capital structure. The capital structure of the firm can contain debt, preferred stock and common stock. The WACC take the weight of each component as a proportion of total value of assets and multiply it by the rate of return or cost of each component.

WACC = wD * rD * (1-tax rate)  +  wE *rE

Where,

  • wD and wE represent the weights of debt and equity as a proportion of total assets
  • rD and rE are the cost of debt and cost of equity
  • We multiply rD by (-tax rate) because we take after tax cost of debt for WACC calculation

Weight of debt = 2000000 / (2000000 + 3000000)  =  2/5 or 0.4

Weight of equity is = 1 - 0.4 = 0.6

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WACC = 0.1164 or 11.64%

3 0
3 years ago
Which banking-related entity shares similarities with the purpose and function of the ncua?
Igoryamba

The banking-related entity shares similarities with the purpose and function of the ncua is " Federal Credit Union".

<h3>What do you mean by NCUA?</h3>

The term NCUA is defined as the National Credit Union Administration. It was established on 10 March, 1970.

Moreover, NCUA insures credit union accounts. while the FDIC provides federal insurance for bank accounts.Both the Federal credit union and NCUA come with the same limits on insurance coverage.

Adding to it, the Credit unions were gaining popularity and popping up all over America, but it was only in the 1930s that the credit union movement achieved federal recognition and national acceptance.

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brainly.com/question/13703439

#SPJ4

6 0
2 years ago
The Colson Company issued $407,000 of 9% bonds on January 1, 2014. The bonds are due January 1, 2020, with interest payable each
Zielflug [23.3K]

Answer:

Dr cash    $407,000

Cr bonds payable       $407,000

July 1

Dr interest expense   $ 18,315.00  

Cr cash                                              $ 18,315.00  

December 31

Dr interest expense   $ 18,315.00  

Cr interest payable                                          $ 18,315.00  

Explanation:

The bond was issued at face value of $407,000 which means that cash of $407,000 was received which is to be debited to cash account and bonds payable account credited for the same amount.

On July1 ,interest coupon of  $ 18,315.00   ($407,000*8%*6/12) was paid which means that interest expense is debited with $ 18,315.00   while cash is credited.

On 31 December ,interest coupon of  $ 18,315.00   ($407,000*8%*6/12) was due  which means that interest expense is debited with $ 18,315.00   while interest payable is credited.

6 0
3 years ago
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