1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
tresset_1 [31]
3 years ago
5

Assume that you just won $35 million in the Florida lottery, and hence the state will pay you 20 annual payments of $1.75 millio

n each beginning immediately. If the similar risk to the lottery earnings (e.g., the rate on 20-year U.S. Treasury bonds) is 6 percent, what is the present value of your winnings
Business
1 answer:
Rus_ich [418]3 years ago
7 0

Answer:

$21.277 million

Explanation:

Data provided in the question:

Amount of lottery won = $35 million

Number of annual payments = 20

Amount of annual payment = $1.75 million

Interest rate = 6%

Now,

Present value of the payment = Payment × Present value factor

Also,

Present value factor = [1 + r]⁻ⁿ

Since the payment started immediately

Therefore,

Base year i.e n = 0

Thus,

we have

Year (n)         Annual payment              Present value

   0                    $1.75 million                   $1.75 million

   1                    $1.75 million                   $ 1.650943 million

   2                    $1.75 million                   $1.557494 million

   3                    $1.75 million                   $1.469334 million

   4                    $1.75 million                   $1.386164 million

   5                    $1.75 million                   $1.307702 million

   6                    $1.75 million                   $1.233681 million

   7                    $1.75 million                   $1.16385 million

   8                    $1.75 million                   $1.097972 million

   9                    $1.75 million                   $1.035822 million

   10                    $1.75 million                   $0.977191 million

   11                    $1.75 million                   $0.921878 million

   12                    $1.75 million                   $0.869696 million

   13                    $1.75 million                   $0.820468 million

   14                    $1.75 million                   $0.774027 million

   15                    $1.75 million                   $0.730214 million

   16                    $1.75 million                   $0.688881 million

   17                    $1.75 million                   $0.649888 million

   18                    $1.75 million                   $0.613102 million

   19                    $1.75 million                   $0.578398 million

Hence,

The present value of the  winnings = ∑ Present value of payments

= $21.277 million

You might be interested in
Identify the trade-restraining practice that this example demonstrates. Two retailers decide that they will both sell no more th
Sav [38]

Answer:

The right approach is "Controlling output".

Explanation:

  • Correlation between these two retailers starts deciding that they would rather whether to sell no upwards of hundred TV premium increases for every month throughout order to ensure the highest TV appearance.
  • This seems to be essentially successful when something is necessary to maintain this same inventory but instead influence the suitable provision including its corporation as well as to create pricing power by offering to buy a small share of the economy.
5 0
3 years ago
On february 28th of 1986, _____________ starts her first solo world tour, starpeace, planning both u.s. and european dates. due
Monica [59]
Yoko Ono is the answer
5 0
3 years ago
Pamela, a 1/3 partner, has an adjusted basis of $100,000 for her partnership interest. If Pamela sells her entire partnership in
creativ13 [48]

Answer: Capital gain = $10,000 ; Ordinary income = $25,000

Explanation:

Here is the complete question:

The PLM Partnership balance sheet includes the following assets on December 31 of the current year:

Basis FMV

Cash $230,000 $230,000

Accounts receivable 0 75000

Land 70,000 100,000

Total $300,000 $405,000

Pamela, a 1/3 partner, has an adjusted basis of $100,000 for her partnership interest. If Pamela sells her entire partnership interest to Emma for $135,000 cash, how much capital gain and ordinary income must Pamela recognize from the sale?

The following can be calculated based on the question above:

Pamela's share of the unrealized receivables will be the ordinary income which will be the unrealized receivables of $75000 which is then multiplied by 1/3 which is the interest. This will be:

Ordinary income = 1/3 × $75,00

= $25,000

The capital gain will be the difference that occurs between total gain and ordinary income.

Total gain difference

= $135,000 - $100,000

= $35,000

Ordinary Income = $25,000

Capital gain = $35,000 - $25,000

= $10,000

5 0
3 years ago
What are two advantages and two disadvantages of the informal economy
AnnyKZ [126]

Answer:

Advantages of Informal Sector employment:

Some employers pay well because company owners do not have many tax obligations. Employee effort is directed towards achieving profit rather than satisfying irrelevant routines.

There can be a close and direct relationship with the employer, therefore making it easy to get permission when in need of time off.

You are saved the hassle of paying Pay As You Earn tax.

There’s no red tape when it comes to dealing with personnel issues which are expressly handled either by the employer him/herself, or a senior manager.

Sometimes employment is done on the spot with little emphasis on attending lengthy job interviews and countless aptitude tests.

Sometimes one is employed because of one’s personal relationship with the employer rather than on merit.

Disadvantages of Informal Sector employment:

Little or no job security.

Unprotected by labour laws.

Odd working hours.

No pension, insurance or health insurance scheme.

Summary dismissals.

Difficult to make any savings due to low wages.

A brief illness or injury or injury can mean no financial means to survive.

Explanation:

4 0
3 years ago
Which statement is true of passive radio frequency identification (RFID) tags?
Mumz [18]

Answer: They have no internal power supply.

Explanation: Passive radio frequency identification tags are tags that do not posses batteries in them but posses a little antenna or sensor which is triggered ON when it is brought close to a reader.

the passive RFID tags work only for short distance and have the ability to last many years. The RFID tags sends out the stored information in it to the reader when the radio waves from the reader activates it.

8 0
3 years ago
Other questions:
  • Joyce just closed on a condo for $366,900 and put down 20% to obtain an 80% loan and avoid having to pay for private mortgage in
    12·1 answer
  • One form of IDS starts operation by generating an alert for every action. Over time, the administrator adjusts the setting of th
    5·1 answer
  • Assume that a $1,000,000 par value, semiannual coupon US Treasury note with four years to maturity has a coupon rate of 4%. The
    8·1 answer
  • Finish the sentence, gym is to healthy as book is to ?
    14·1 answer
  • What action is most likely to result in an increase in the money supply
    13·1 answer
  • For this assignment, choose from any two categories products that are at different product life cycle stages. Identify the produ
    7·1 answer
  • Medeco sold goods for $100 to a charge customer. The customer returned for credit $25 worth of goods. Terms of the sale were 1/1
    8·1 answer
  • Which of the following statements does not describe a motivation by the buyer or seller in the acquisition or sale of a company?
    11·1 answer
  • Which account option is designed to house money for easy access, either by check or by debit card?
    9·2 answers
  • Katherine is developing a forecast for her company's next year's sales of an organic fertilizer to retail gardening nurseries. s
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!