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
anygoal [31]
3 years ago
11

A lottery claims its grand prize is $10 million, payable over 20 years at $500,000 per year. If the first payment is made immedi

ately, what is this grand prize really worth? Use an interest rate of 6%. Show work
Business
1 answer:
Ronch [10]3 years ago
7 0

Answer:

Answer is $6,079,058.25

Explanation:

This is a simple present value problem.

Present value of annuity shows the worth of annual payments which is present.

As per the given statement, grand prize of lottery is $10 million. This is payable over 20 years at $500,000 per year. The interest rate is 6%.

To find the real worth of the grand prize, each $5 million payment must be "brought back" to their current value at a 6% per year rate.

N = 20; PMT = 500,000; FV = 0 ; I = 6% ; Payments in BEGIN mode.

PV= Cash flow/ (1+rate of return) to the power n

PV will be addedc exponential power 20 times giving answer as $6,079,058.25

Hence, PV = $6,079,058.25

You might be interested in
In what different ways did global commerce transform human societies and the lives of individuals during the early modern era?
loris [4]

Explanation:

The beginning of the modern era was marked by the fortification and expansion of European monarchies throughout the world. It was from the fifteenth century with the great navigations that occurred the integration between various parts of the globe, having as main historical landmarks the discovery of the Americas and the trade route between Africa and Asia, which generated slavery of many individuals, as well as new and greater trade relations, increasing capital accumulation and the marketed economy worldwide, as well as the discovery and creation of new technologies.

4 0
3 years ago
The federal deficit fell from $1,300 billion in 2011 to $1,087 billion in 2012. How much of this change was due to
densk [106]

Answer:

Dear Student,

I trust that this meets you well.

The question requires additional details for it to be answered.

Kindly provide the same as soon as you can.

Cheers

6 0
3 years ago
Beene Distributing is considering a project that will return $150,000 annually at the end of each year for the next six years. I
mr_godi [17]

Answer:

$714,980.95

Explanation:

The most it would be willing to pay is the present value of the cash flows

present value is the sum of discounted cash flows from a project

present value can be determined with a financial calculator

Cash flow each year from year 1 to 6 = $150,000

I = 7%

Present value = $714,980.95

To find the PV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.  

3. Press compute  

8 0
3 years ago
_____ personality tests use a standard set of questions and are scored in a standardized way
Strike441 [17]
The answer is objective personality test.
Objective personality test is designed to measures the personality of a certain individual without being exposed to the bias of the tester.
To fully avoid the bias, the researchers usually created a scoring system that based on quantitative scores rather than the qualitative.
7 0
2 years ago
Suppose nominal GDP in the base year was $380 million. Five years later, nominal GDP was $480 billion and the GDP price index wa
Ostrovityanka [42]

Answer: increased by $20 billion

Explanation:

Real GDP is year of interest is:

= (Nominal GDP in year of interest/ GDP Price index in year of interest) * 100

= 480/120 * 100

= $400 billion

Nominal GDP is equal to Real GDP in base year so increase in real GDP is:

= 400 - 380

= $20 billion

6 0
3 years ago
Other questions:
  • The nominal gdp of the u.s. in 2015 was approximately​ $17.3 trillion. this means that
    6·1 answer
  • Home Smart Inc. is a chain of supermarkets that sells its products at higher prices than its competitors. Yet, the supermarket c
    14·1 answer
  • Gabrielle is due to give birth to a boy in march. before she became pregnant, gabrielle weighed 140 pounds, which was in the hea
    12·2 answers
  • Asap!!!!!!!!!!!!!!!!
    14·2 answers
  • FILL IN THE BLANK
    7·2 answers
  • A company checks written for $600 for rent expense cleared the bank correctly but the company accountant incorrectly recorded th
    10·1 answer
  • Suppose Big Bank offers an interest rate of 8.5​% on both savings and​ loans, and Bank A offers an interest rate of 9.0​% on bot
    7·1 answer
  • During the maturity stage of the product life cycle, profit declines primarily because: Multiple Choice a) there is fierce price
    8·1 answer
  • Vibrant Company had $980,000 of sales in each of three consecutive years 2016–2018, and it purchased merchandise costing $540,00
    7·1 answer
  • Which of the following is an example of a human resource?
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!