Project: Benefit Analysis Study: Small Business Expansion

Winners of the Georgia Lotto drawing are given the choice of receiving the winning amount divided equally over 2222 years or as

Wewaii [24]

Answer:

0 i.e. zero

Explanation:

The formula we will us to calculate the cash option payout for formula for calculating the present value (PV) .

Present value (PV) can simply be described as the current value of a future amount or future stream of cash flows given a certain return rate.

To calculate the PV of a future cash flow, we will discount it by using the discount rate.

The formula is provided as follows:

PV = FV/(1 + r)^n ............................................ (1)

Where,

PV = Present Value = ?

r = discount rate = 66% = 0.66

FV = annual future value = $863,636.36

n = number of years = 2222 years

Note that the annual future value calculated by diving the $1919 million by 2222 years and this give us $863,636.36 (i.e. 1,919,000,000 ÷ 2222 = $863,636.36).

Substituting the figures above into equation (1), we obtain:

PV = 863,636.36/(1 + 0.66)^2222

= 863,636.36/(1.66)^2222

= 863,636.36/∞

PV = 0

This is because, the division of any number by infinity is equal to zero. And if we multiply by zero by 2222, it will still give us zero PV.

Therefore, the cash option payout will be zero. It is better the winner take the option of collecting $863,636.36.

5 0

3 years ago

According to hitler, to whom must propaganda be directed?

zimovet [89]

The less educated masses

4 0

4 years ago

Another company plans to issue 20-year bonds with a face value of $1,000 and an annual coupon rate of 10%. The market price of s

Lorico [155]

The after-tax cost of debt is 6.28%. Subtract a company's effective tax rate from one and multiply the difference by its cost of debt to calculate its after-tax cost of debt.

<h3>What is After-tax cost?</h3>

After-tax cost denotes the actual costs less an amount equal to the combined federal and state income tax savings relating to the deductibility of said costs for federal and state tax purposes in the year in which such costs are incurred.

WACC represents a company's average after-tax cost of capital from all sources, including common stock, preferred stock, bonds, and other forms of debt.

WACC is the average interest rate that a company anticipates paying to finance its assets. The pre-tax cost of debt must be tax-affected because interest is tax-deductible, effectively creating a "tax shield" that is, interest expense reduces a company's taxable income (earnings before taxes, or EBT).

Therefore,

The after-tax cost of debt is 6.28%.

FV = -$1,000

PMT = -$100

N = 20 years

PV = $1,098 before including flotation costs; $1,098×(1-.05) = $1,043.10 after including flotation costs.

Compute I/Y = 9.511%

After-tax cost of debt = 9.511%×(1-.34) = 6.28%

To learn more about After-tax cost, refer to:

brainly.com/question/25790997

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6 0

2 years ago

What three types of information are usually included in the introudiction of a periodic table

muminat

It has the name of component the atomic number and the amount of atoms and protons that are in the component

6 0

3 years ago

In a fuel economy study, each of 3 race cars is tested using 5 different brands of gasoline at 7 test sites located in different

romanna [79]

Answer:

210

Explanation:

The number of race cars = N₁ = 3
The number of gasoline brands = N₂ = 5
The number of test sites = N₃ = 7
The number of drivers that participated = N₄ = 2

This study must include each N₁, and it has to be done at each N₃, using each N₂, while carried out by each N₄ ⇒ that means that the total number of possibilities:

N₁ x N₃ x N₂ x N₄ = 3 x 7 x 5 x 2 = 210

The total number of test runs is 210.

4 0

3 years ago