Discovered that he holds the winning tickets

Assignment Help Financial Management
Reference no: EM131013900

Jack just discovered that he holds the winning tickets for the $87 million mega lottery in Missouri. Now he needs to decide which alternative to choose: (1) a $44 lump-sum payment today or (2) a payment of $2.9 million per year for 30 years; the first payment will be made today. If Jack’s opportunity cost is 5%, which alternative should he choose?

Reference no: EM131013900

Questions Cloud

How much time will the trip take as measured on earth : Particle physicists use particle track detectors to determine the lifetime of short-lived particles. A muon has a mean lifetime of 2.2 µs and makes a track 9.5 cm long before decaying into an electron and two neutrinos. What was the speed of the m..
Investments for your firms retained earnings : You are offered two investments for your firm's "retained earnings" ($4,238,000) As CFO you are looking for ways to invest the firm's hard earned money. Which option will give you a better return on and of investment (two ...ROI's)? Option 1 -pays ou..
Middle managers, and employees : Can one performance appraisal instrument be used for all levels in an organization, i.e., executives, middle managers, and employees? Why or why not?
Book-and-market–value balance sheets : Here are book-and-market – value balance sheets of the United Frypan Company (UF): Book: Net Working Capital $20 $40Debt Long-Term assets 80 60Equity $100 $100 Market: Net Working Capital $20 $40 Debt Long-Term assets 140 120 Equity $160 $160 Assume ..
Discovered that he holds the winning tickets : Jack just discovered that he holds the winning tickets for the $87 million mega lottery in Missouri. Now he needs to decide which alternative to choose: (1) a $44 lump-sum payment today or (2) a payment of $2.9 million per year for 30 years; the firs..
Describe the forces of globalization and its implications : Summarize different types of foreign exchange exposure faced by the MNC. Identification and measurement of these risks
Where does the kinetic energy that is produced come from : A salesman driving a very fast car was arrested for driving through a traf?c light while it was red, according to a policeman parked near the traf?c light. The salesman said that the light was actually green to him, because it was Doppler shifted...
Will it take him to repay the loan : While Steve Bouchard was a student at the University of Florida, he borrowed $12,000 in student loans at an annual interest rate of 9%. If Steve repays $1,500 per year, how long, to the nearest year, will it take him to repay the loan?
Sales of foreign assets by domestic residents : Purchases and sales of foreign assets by domestic residents would appear in the ________ account of the balance of payments.

Reviews

Write a Review

 

Financial Management Questions & Answers

  What is the projects total nominal cash flow from assets

Etonic Inc. is considering an investment of $384,000 in an asset with an economic life of 5 years. The firm estimates that the nominal annual cash revenues and expenses at the end of the first year will be $264,000 and $89,000, respectively. All corp..

  Accounting breakeven quantity

A company is considering a project to manufacture a product with the following pro forma cost and sales information: Accounting Breakeven QUANTITY = 10,500 units; Cash Breakeven QUANTITY = 8,200 units; What is the PRICE of the product under this expe..

  Calculate net operating profit after taxes

Calculate net operating profit after taxes (NOPAT) if a firm has sales of $1,000,000, operating profit (EBIT) of $100,000, interest expense of $50,000, and a tax rate of 30%.

  By what percent did the nominal value of the peso change

All interest rates are given as p.a. You must adjust to the period. Take money and interest rates to four decimals before rounding. By what percent did the nominal value of the U.S dollar change during 1995? By what percent did the nominal value of t..

  Cost of preferred stock

Duggins Veterinary Supplies can issue perpetual preferred stock at a price of $72.50 per share with an annual dividend of $4.50 a share. Ignoring flotation costs, what is the company's cost of preferred stock, rps?

  What is the reward-to-risk ratio in equilibrium

Consider an asset with a beta of 1.2, a risk-free rate of 5%, and a market return of 13%. What is the reward-to-risk ratio in equilibrium? What is the expected return on the asset?

  Compound interest on the unpaid balance

Mr. Bill S. Preston, Esq., purchased a new house for $170,000. He paid $10,000 down and agreed to pay the rest over the next 15 years in 15 equal end-of-year payments plus 11 percent compound interest on the unpaid balance. What will these equal paym..

  What will be the percentage change in the bond price

A bond has a Macaulay duration of 6.25 years. What will be the percentage change in the bond price if the yield to maturity increases from 6 percent to 6.4 percent?

  Industrial development bond-equivalent maturity and risk

In late 1993, the Weyerhauser Corporation was considering the use of a so-called “Industrial Development Bond” to help finance the construction of a facility in the state of North Carolina. Why would Weyerhauser’s IRBs have a lower effective annual y..

  What is the value of the bond if the market rate

A bond's par value is $1,000. It has 5 yrs. until maturity. Its coupon rate is 7%. What is the value of the bond if the market rate is 10%, assuming annual compounding?

  When should a firm consider the portfolio effects of project

When should a firm consider the portfolio effects of a new project? What are the primary advantages and disadvantages of applying simulation to capital budgeting risk analysis?

  Calculate the unlevered net present value

Calculate the unlevered internal rate of return (IRR). Calculate the unlevered net present value (NPV).

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd