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Leni [432]
3 years ago
6

Shelley wants to cash in her winning lottery ticket. She can either receive eight $100,000 semiannual payments starting today, o

r she can receive a single-amount payment today based on a 6% annual interest rate. What is the single-amount payment she can receive today?
Business
1 answer:
Aleksandr-060686 [28]3 years ago
6 0

Answer:

single-amount payment $925,160

Explanation:

Given data:

Amount $100,000

Rate 6%

interest semi annually 3%

Number of period 5

Lumpsum Payment = A\times {PVAF@ I,n}

                                = A\times {PVAF@ 3\%,5}

calculation for PVAF

PVAF @ I,N =\frac{(1-(1+I)^-N)}{I}

[email protected] 3%,5 = \frac{(1-(1+0.03)^{-5})}{0.03}

                          =4.58

                   

Lumpsum Payment =202000*4.58

                               =925160

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