Present value of your windfall if appropriate discount rate

Assignment Help Financial Management

Reference no: EM131022476

You have just received notification that you have won the $2.11 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you’re around to collect), 69 years from now.

Required: What is the present value of your windfall if the appropriate discount rate is 9 percent? Please show all work and round four decimal places.

Reference no: EM131022476

Questions Cloud

What is the present value of the savings : You are thinking of building a new machine that will save your company $1,000 in the rst year. The machine will then begin to wear out so that the savings decline at a rate of 2% per year forever. What is the present value of the savings if the inter..

Retirement account-previous one to compensate for in ation : You want to deposit $X in your retirement account today. You plan to retire in 35 years and make your rst withdrawal from your account (at time 35) of $100,000; you will make 19 additional annual withdrawals (your last one is at time 54) but each one..

How much money will you have in eight years : You are schedule to receive $10,000 in two years. When you receive it, you will immediately invest it for six more years in a savings account that earns 5% annually. How much money will you have in eight years?

Recall the mechanism behind continuous compounding : Recall the mechanism behind continuous compounding: the whole period is divided into increasing numbers of smaller and smaller sub-periods, and the resulting effective rate is calculated as a limit of the effective rates under increasing number of su..

Present value of your windfall if appropriate discount rate : You have just received notification that you have won the $2.11 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you’re around to collect), 69 years from now. What is the present value..

The YTM on a bond is the interest rate : The YTM on a bond is the interest rate you earn on your investment if interest rates don’t change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY). Two years from now, the YTM on your b..

Considering operating a lock-box system : Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 500 payments a day will be made to lock boxes with an average payment size of $2,500. If the lock box makes the cash availabl..

How many years do these bonds have left until they mature : Shinoda Corp. has 8 percent coupon bonds making annual payments with a YTM of 7.4 percent. The current yield on these bonds is 7.75 percent. How many years do these bonds have left until they mature?

About the percentage change in price of bond : Bond J has a coupon rate of 7 percent and Bond K has a coupon rate of 13 percent. Both bonds have 20 years to maturity, make semiannual payments, and have a YTM of 10 percent. If interest rates suddenly rise by 2 percent, what is the percentage price..

User Account

All Pages