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
marysya [2.9K]
3 years ago
9

After hearing a knock at your front door, you are surprised to see the Prize Patrol from your state’s online lottery agency. Upo

n opening your door, you learn you have won the lottery of $22.1 million. You discover that you have three options: (1) you can receive $2.21 million per year for the next 12 years, (2) you can have $19.5 million today, or (3) you can have $5.4 million today and receive $1.70 million for each of the next 10 years. Your lawyer tells you that it is reasonable to expect to earn an annual return of 10% on investments.
Required:
What is the present value of the above options?
Business
1 answer:
Helga [31]3 years ago
5 0

Answer:

Option 2 is best option on the basis of present value analysis of all the options available.

Explanation:

Option 1  NPV = ($2.21 Annual Inflow * 6.814 Annuity Factor 12 year @10%)  = $15.06m

Option 2 NPV = $19.5m

Option 3 NPV = $5.4m + ($1.7m Annual Inflow * 6.145 Annuity Factor for next 10 years @10%) = $15.85m

From the above options the best option available is option 2 which is worth more in todays prices than other options available.

You might be interested in
The balance in Allowance for Doubtful Accounts will directly impact the end-of-period adjustment for bad debt expense when using
sergiy2304 [10]

Answer:

<u>C</u>

Explanation:

Because in the aging method, you firstly calculate the aging of the items. And then, in the end of the period, you build the Allowance for Doubtful Accounts estimating the collections that are hard to get the amount of money.

8 0
3 years ago
When firms grow larger, they sometimes add many additional layers of managers between the top executives and the entry-level emp
DiKsa [7]

Answer:

The correct answer is letter "C": diseconomies of scale.

Explanation:

Diseconomies of scale is a point where a business no longer experiences a decrease in cost per unit of output. Rather, after this point cost per unit tend to increase. Typically, diseconomies of scale arise when the increase in production represents an increase in the average unit per cost.

6 0
3 years ago
The Federal Reserve wants to change the nominal interest rate from 7% to 5%. What action
alisha [4.7K]

Answer:

the answer is a

Explanation:

i just took the usatestprep

6 0
3 years ago
Entrepreneurs use distributors to purchase resources and invest in the production of goods. True or false?.
ANEK [815]

Entrepreneurs do not use distributors to purchase resources and invest in the production of goods so this statement is FALSE.

<h3>How do Entrepreneurs purchase resources?</h3>

Entrepreneurs are able to invest in the production of the goods and services they provide by using their own funds and liability.

They do not use distributors but rather foot the bills as well as getting loans to be able to engage in the purchase of resources.

Find out more on Entrepreneurship at brainly.com/question/13628349

#SPJ1

4 0
2 years ago
Describe for me what a URL is and its purpose?*
klemol [59]

Answer:a url is the address of a World Wide Web page. A URL is a unique identifier used to locate a resource on the internet. It is also referred to as a web address. URLs consist of multiple parts including a protocol and domain name that tell a web browser how and where to retrieve a resource.

Explanation:

4 0
3 years ago
Read 2 more answers
Other questions:
  • Eve Cosmetics Company consists of two departments, Blending and Filling. The Filling Department received 50,000 ounces from the
    13·1 answer
  • You are planning a graduation trip to Mexico. Other things the same, if the dollar appreciates relative to the peso, then
    5·1 answer
  • Which of the following taxpayers (all of whom have one qualifying child for purposes of the child tax credit) are able to claim
    8·1 answer
  • A product's standard cost card specifies that a unit of the product requires 4 direct labor-hours. During September, 3,350 units
    15·2 answers
  • If you pay for parking at a smart parking payment terminal powered by solar panels with a contactless visa card, which of the fo
    11·1 answer
  • John Joos is the owner and operator of Way to Go LLC, a motivational consulting business. At the end of its accounting period, D
    14·1 answer
  • Select one country and consider the export of that country what is the reason for the export
    9·1 answer
  • A company had an unadjusted Cost of Goods Sold of $1,690,000. The company closes its underapplied or overapplied overhead to Cos
    7·1 answer
  • Асу
    11·1 answer
  • When and where were the first vending machines introduced in the united states?.
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!