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stira [4]
3 years ago
15

Jose wants to cash in his winning lottery ticket. He can either receive five $5,000 annual payments starting today, or he can re

ceive a lump-sum payment now based on a 3% annual interest rate. What would be the lump-sum payment?
Business
1 answer:
ExtremeBDS [4]3 years ago
7 0

Answer:

The lump sum payment =  $23,585.49

                                 

Explanation:

The winning lottery is an example of an advanced annuity. <em>An advanced annuity is a series of cash flows that occurs for a certain number of years with the first cash flow occurring now.</em>

The first cash flow is represents one out of the five, so the balance is a four-year annuity.

So we can work out the present value of the annuity for the last four years as follows:

PV = (1 - (1+r)^(-n)/r )   ×  Annual cash flow

r = 3%=0.03, n = 4, Annual cash flow = 5000

PV = (1- ((1+0.03)^(-4))/0.03)  × 5,000

    = 3.7170 × 5,000

   =$ 18,585.49

The lump sum payment = PV of the first payment + PV of the four year annuity

The lump sum payment = $5000 + $ 18,585.49

                                       =  $23,585.49

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Answer:

The correct answer is $56,000.

Explanation:

According to the scenario, the given data are as follows:

Average checks per day = $14,000

Days in clearing = 4 days

Interest rate = 0.018% per day

So, we can calculate the company's float by using following formula:

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By putting the value in the formula, we get

Company's Float = $14,000 × 4

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8 0
3 years ago
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faust18 [17]

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4 0
3 years ago
A small company is setting up a new remote satellite office. Employees in the remote office need to access network resources fro
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Answer:

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Similarly, if the <em>response time</em> is critical (real-time processing is essential for business operating), the company should consider implementing a thick client, which is faster and more reliable. However, thick clients are almost always more expensive to implement.

7 0
3 years ago
You plan to set up an endowment at your alma mater that will fund $205,000 of scholarships each year indefinitely. If the princi
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<u>Solution and Explanation:</u>

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= 205000 divided by 4 percent

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Which is a dimension or assumption of the marginal-utility theory of consumer behavior? The consumer has a large income. Goods a
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Answer:

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