Calculate the present values

Assignment Help Macroeconomics
Reference no: EM131376662

You have a winning lottery ticket for $100,000. You never will get the full $100,000. The State offers you three options. The first pays you $80,000 up front for the entire amount. The second pays you the winnings over a three-year period. The last option pays you a large payment today with small payments in the future. The payment options are detailed in the table below: (a) Calculate the present value of each payment option, assuming the interest rate is 12%. (b) Then, calculate the present values based on an interest rate of 5%. (c) Compare your answers and explain why they are different when the interest rate changes.

Amount paid today

80000

22000

50000

Amount paid after 1 year

0

22000

12000

Amount paid after 2 years

0

22000

12000

Amount paid after 3 years

0

22000

12000

Please show work and type answer.

Reference no: EM131376662

Questions Cloud

How can a company participating in ebusiness : How can a company participating in ebusiness keep its information secure?- What technologies can a company use to safeguard information?
What are the reasons a company experiences downtime : What are the reasons a company experiences downtime?-  What are the costs associated with downtime?
Comparing the dual roles of scientist and practitioner : Write a 700- to 1,050-word paper comparing the dual roles of scientist and practitioner that I/O psychologists play. Include the following in your response: Specific examples of how research advances the field
Identify two epolicies the government should implement : Define information ethics and information security and explain why each is critical to any government operation.- Identify two epolicies the government should implement to help combat cyberterrorism.
Calculate the present values : (a) Calculate the present value of each payment option, assuming the interest rate is 12%. (b) Then, calculate the present values based on an interest rate of 5%. (c) Compare your answers and explain why they are different when the interest rate c..
Describe your top-three fears in competing in global market : As the CFO, describe your top-three fears in competing in the global market, and how you plan to overcome those fears. Provide support for your rationale.
Personal and organization decisions : What is economics? What role does economics play in your personal and organization's decisions?
How the article can enhance your professional decisions : Discuss how the article can enhance your professional and education decisions in the future. Additionally, explain how you will apply the information in the article to your everyday lifestyle.
Solve the dilemma using kant ethics : Create a 2-4 paragraph "dilemma" similar to the other dilemmas you have been solving throughout this term. Solve the dilemma using Kant's ethics (Categorical Imperative)

Reviews

Write a Review

Macroeconomics Questions & Answers

  Human service interactions in terms of macro

human service interactions in terms of macro systems-communities and organizations.bull describe the concept of

  Suppose you are known in your neighborhood as da bomb

suppose you are known in your neighborhood as da bomb financial mack daddy. a couple with an 8 year-old daughter have

  Terms of memory organization and addressing

Discuss differences in RISC and CISC architecture processors in terms of memory organization and addressing. Provide specific examples of both RISC and CISC processor types.

  International accounting standards board

Explain the concepts of capital and capital maintenance as defined in the International Accounting Standards Board's (IASB) Framework for the Preparation and Presentationof Financial Statements (Framework).

  Calls for an aggressive growth plan

The organization's strategic plan you wrote about in Week 2 calls for an aggressive growth plan, requiring investment in facilities and equipment, growth in productivity, and labor over the next five years.  It is your responsibility to determine ..

  How is the tax incidence split between workers and firms

Suppose that after the tax is imposed, the wage rate rises to $12.00 an hour and that only 8,000 workers are employed. How is the tax incidence split between workers and firms?

  Present the rules for the external and internal firewall

Present the rules for the external and internal firewall in a table format a) Email may be sent using SMTP in both directions through the firewall, but it must be relayed via the DMZ mail gateway. External email must be destined for the DMZ mail serv..

  Under drug related groups system

What could be possible inefficiency happening under Drug Related Groups system? Why?

  Demand diagram to model the us stock market

Draw a supply/demand diagram to model the US stock market (use the value of a stock price index such as the S&P 500 to represent the overall level of stock prices.

  Variables of string data type

Write a c++ program that reads 2 words, stores them in variables of string data type, and displays the shortest length of these 2 words. Can u also please explain each line of coding in simple arithmetic.

  Marginal external costs and market efficiency

How many cases of peaches will be produced per week during the growing season, and what will the selling price per case be if producers ignore the marginal external costs imposed on others?

  Why empirical facts can cause a us trade deficit

Use the small open economy model below to explain the logic of why these to empirical facts can cause a U.S. trade deficit. Assume that the worldwide risk-free real interest rate is fixed at r* and does not move.  Use words to explain your equatio..

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