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
Vlada [557]
3 years ago
11

Howie Long has just learned he has won a $506,300 prize in the lottery. The lottery has given him two options for receiving the

payments.
(1) If Howie takes all the money today, the state and federal governments will deduct taxes at a rate of 46% immediately.

(2) Alternatively, the lottery offers Howie a payout of 20 equal payments of $37,000 with the first payment occurring when Howie turns in the winning ticket. Howie will be taxed on each of these payments at a rate of 26%.

Required:

1. Compute the present value of the cash flows for lump sum payout.

2. Assuming Howie can earn an 8% rate of return (compounded annually) on any money invested during this period, compute the present value of the cash flows for annuity payout.

3. Which pay-out option should he choose?
Business
1 answer:
Hitman42 [59]3 years ago
5 0

Answer and Explanation:

According to the scenario, computation of the given data are as follow:-

A).Present Value of the Cash Flow for the Lump Sum Payout

= Prize of Lottery Amount × (1 -Tax Rate)

= $506,300 × (1 - 0.46)

= $506,300 × 0.54

= $273,402

B).Present Value of the Cash Flows for Annuity Payout is

= Annuity Payment × (1 - Tax Rate) × PVIFA 8%,20 Years × (1  + Rate of Return)

= $37,000 × (1 - 0.26) × 9.8181 × (1 + .08)

= $37,000 × 0.74 × 9.8181 × 1.08

= $290,325

c). According to the analysis, $290,325 is more than the $273,402, So he should be chooses option (b) $290,325 as a payout option.

     

You might be interested in
Type the correct answer in the box.
igomit [66]

Targeting strategy is the strategy you following if you are concentrating on serving a particular segment of customers better.

<h3><u>Explanation:</u></h3>

Customer segmentation, targeting and position is the major things that are to be concentrated in making the products to move well in the market. segmentation refers to the grouping of customers based on certain characteristics such as demography,age,gender,etc. Customer segmentation is followed by the targeting strategy.

Targeting refers to the advertising activities and other services for only a certain segments. For example the product called kinder joy only targets on the children segment. It only identifies certain segment and focuses on it to better serve that particular segment.

8 0
3 years ago
The following options it gives me are
kupik [55]

Answer:

There would be a surplus of 2,000 bags, and producers would be happy with the law.

Explanation:

Unlike a price floor that prevents the price of movie theater popcorn from falling below the equilibrium price level of $15, a price ceiling of $5 prevents the price of movie theater popcorn from rising above $20. When a price ceiling is set above the equilibrium price, the quantity supplied exceeds the quantity demanded by 2,000 packets of popcorn, and there will be a surplus supply.

5 0
3 years ago
Dave manages a Shoney's restaurant. He is considering staying open later in the evening. For Dave, the variable costs associated
UNO [17]

Answer:

The correct option is C, rent on the restaurant building

Explanation:

The ingredients used in preparing food is variable cost as it varies with the number of plates of food prepared.

Hours worked by cooks determine how much they are paid since the longer they stay the higher the pay,hence it is a variable cost.

The rent on the restaurant building stay the same regardless of opening hours ,hence it is fixed not variable cost.

The energy costs varies with the number of opening hours, it is a variable cost.

The hours worked by servers determine how their take-home would be ,as a result it is a variable cost.

7 0
3 years ago
The ultimate goal of JIT is to have:__________.
sineoko [7]

Answer:

The correct answer is (A)

Explanation:

JIT stands for just in time; it is a process which is used to handle and coordinate the inventory management.  The main goal is to handle the inventory efficiently to improve the flow of the system in a timely manner and to eliminate discrepancies in the inventory management system. Overall, it helps to eliminate the disruption and to make the system flexible and smooth.

8 0
3 years ago
Best Appliances owns​ 90% of the voting stock of​ Wratchet, Inc. Which of the following is​ true? A. Wratchet would be considere
djverab [1.8K]

Answer:

B. Best would be considered the parent entity.

Explanation:

When a company owns another companies stock of 90% or more it would be considered as parent entity. The parent entity can control the the subsidiary. The financial statements will be consolidated into parents companies accounts.

6 0
3 years ago
Other questions:
  • Which bid strategy should Sara use if her goal is to get more people to call her local catering business?
    14·1 answer
  • Turquoise and Topaz Sisters had retained earnings of $10,000 on the balance sheet but disclosed in the footnotes that $2,000 of
    11·1 answer
  • company produces a single product. Last year, fixed manufacturing overhead was $30,000, variable production costs were $48,000,
    15·1 answer
  • Which of the following statements is most correct? a. All else equal, if a bond’s yield to maturity increases, its price will fa
    8·1 answer
  • During the current year, Robby’s Camera Shop had sales revenue of $169,000, of which $68,000 was on credit. At the start of the
    7·1 answer
  • Written evidence of the ownership of a piece of property
    11·1 answer
  • Metallica Bearings, Incorporated, is a young start-up company. No dividends will be paid on the stock over the next nine years b
    10·1 answer
  • doug purchased a new factory building on january 15 2001 for 400,000. on march 1 2020 the building was sold. determine the cost
    6·1 answer
  • The inventory of Royal Decking consisted of five products. Information about ending inventory is as follows:
    8·1 answer
  • According to the religious economy perspective, competition through the existence of of a multitude of religions causes religiou
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!