User Account

All Pages

Compute the present value of cash flows for annuity payout

Assignment Help Accounting Basics
Reference no: EM132708428

Question - Tony Long has just learned he has won a $509,800 prize in the lottery. The lottery has given him two options for receiving the payments. (1) If Tony takes all the money today, the state and federal governments will deduct taxes at a rate of 48% immediately. (2) Alternatively, the lottery offers Tony a payout of 20 equal payments of $38,400 with the first payment occurring when Tony turns in the winning ticket. Tony will be taxed on each of these payments at a rate of 25%.

Required -

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

Assuming Tony can earn an 10% rate of return (compounded annually) on any money invested during this period, compute the present value of the cash flows for annuity payout.

Reference no: EM132708428

Questions Cloud

How many units does collier hat inc need to sell : How many units does Collier's Hat Inc. need to sell to just breakeven? If he Keystoned the unit price (cost) how many units would he need to sell to break even?
What is the lakers resulting target service level : What is the lakers resulting target service level (indifference level) for these iconic jerseys?
Discuss the concept of personhood as used in the nursing : Discuss the concept of personhood as used in the nursing as caring theory. Your initial post should be at least 500 words, formatted and cited in current APA.
What will the account be worth six years from today : Roger decides to start an investment accounts,If earns 9% on his investment, what will his account be worth 6 years from today, assuming he compounds annually?
Compute the present value of cash flows for annuity payout : Assuming Tony can earn an 10% rate of return on any money invested during this period, compute the present value of the cash flows for annuity payout
What would comprise effective communication for the group : Describe collaborative skills you would use to create a more positive atmosphere. Explain what would comprise effective communication for this group.
How might the tax change affect the deferred tax liability : Recent tax legislation has reduced the corporate income tax from 35% down to 21 percent. How might this tax change affect the deferred tax liability?
Create an action plan using a translation theory : Create an action plan using a translation theory or model to implement the proposed solution. Provide a description of each component in the translation model.
Compute present value of the bids : The annual maintenance cost on this surface is estimated at 25 cent per square yard for each year except last year of its service. Compute present value of bids

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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