The lump-sum amount instead of the annuity

Assignment Help Financial Management
Reference no: EM131026266

Katy won the Texas lottery. She can take a single lump-sum payout of $12.5 million dollars or receive $825,000 per year for the next 25 years. What rate of return would Katy need to break even if she took the lump-sum amount instead of the annuity?

Reference no: EM131026266

Previous Q& A

  Expected return on stock according to fama-french model

The expected risk premium on small stocks relative to large stocks is 7%, and the expected risk premium on high book-to-market stocks relative to low book-to-market stocks is 5%. Assume that the expected risk premium on the overall stock market relat..

  How can you reduce radon levels in your house

How can you reduce radon levels in your house? What are radioactive decay and "half-life"? Are there some areas/regions that have a higher risk of radon exposure than others?

  What was the rate of return on this investment

Of all the types of investments Jordan could have chosen, he decided to try real estate because, according to Jordan, "as everyone knows, real estate never goes down". Yea, right. Last year he bought an apartment house in Camden, DE. (Of all the plac..

  Increasing annual dividend-decreasing the growth rate

Company A is planning on increasing its annual dividend by 15% a year for the next 4 years and then decreasing the growth rate to 3.5% per year afterwards. The company just paid its annual dividend in the amount of $0.2 per share. Suppose the require..

  Find value of k that makes probability density function

Find the value of k that makes this function a probability density function. Find P(Y1 ≥ 3Y2). That is, find the probability that the cleaning device reduces the amount of pollutant by one-third or more.

  Compute the coefficients of variation

The spread in the annual prices of stocks selling for under $10 and the spread in prices of those selling for over $60 are to be compared. The mean price of the stocks selling for under $10 is $7.67 and the standard deviation $1.48. Compute the coeff..

  How much will gross profit margin grow

If a company has DPS of $3.20 and a retention rate of 20%, what are the company's EPS? A company has revenues of $7.6B and cost of goods sold of $6.2B. If revenues are projected to grow by 5% and COGS by 11%, how much will Gross Profit Margin grow?

  What is the price per share of the firm

You have been asked to calculate the price of a firm using free cash flow evaluation. Last year XYX Company has Free Cash Flow of $12 million. You expect the cash flows to grow at 10% for the next two years, then at 9% for the following two years and..

  Adc channels on a pic24 microcontroller

What's the number of ADC channels on a PIC24 Microcontroller

  What would capital gains and dividend yield be for year

You have been asked to value a stock that will not pay a dividend until three years from now. At that time you estimate the dividend will be $1.40. You estimate that it will grow by 10% for the two following years and at 5% thereafter. What would the..

Reviews

Write a Review

 

Similar Q& A

  What is the maximum percentage decline in the stock

You decide to buy 400 shares of stock at a price of $46 and an initial margin of 50 percent. What is the maximum percentage decline in the stock before you will receive a margin call if the maintenance margin is 21 percent? (Note: Make sure that you ..

  Financial ratio is financial value or measurement expressed

A ratio is one value expressed to another. A financial ratio is one financial value or measurement expressed to another. There are about 20 financial ratios commonly used to assess one company's performance compared to another company in the same ind..

  What is the payback period for each project

What is the payback period for each project? Project A year (0) -500, year (1) 100, year (2) 200, year (3) 200, year (4) 400. Project B, year (0) -500, year (1) 400, year (2) 300, year (3) 200, year (4) 100.

  At what price should the annual payment bond sell

McCurdy Co.'s Class Q bonds have a 12-year maturity, $1,000 par value, and a 5.25% coupon paid semi annually (2.625% each 6 months), and those bonds sell at their par value. McCurdy's Class P bonds have the same risk, maturity, and par value, but the..

  Receiving a fixed rate and paying a libor floating rate

You want to estimate the Fixed Rate for a $100M Notional, 3 year swap that has annual payments. You will be receiving a fixed rate and paying a LIBOR floating rate. The Spot rates for the next three years, based on the yield curve right now, are 6.5%..

  Calculate the expected beta on the portfolio

Your portfolio is diversified. It has an expected return of 10.0% and a beta of 1.10. You want to add 500 shares of Tundra Corporation at $30 a share to your portfolio. Tundra has an expected return of 14.0% and a beta of 1.30. The total value of you..

  Evaluating capital budgeting project

Kristin is evaluating a capital budgeting project that should last for 4 years. The project requires $800,000 of equipment. She is unsure what depreciation method to use in her analysis, striaght-line or the 3-year MACRS accelerated method.

  Use the cash for the expansion

Rexton Oil is an all-equity firm with 100M shares outstanding. Rexton has $150M in cash and expects future free cash flows of $65M per year. Management plans to use the cash to expand the firm's operations, which will in turn increase future cash fre..

  Create cash flow statement and statement of retained

Can someone please help me create a cash flow statement and statement of retained earnings in Excel WITH formula?

  Decide to launch a venture likable lunches

Tony and Franzi, after graduating from the DMBA program, decide to launch a venture "Likable Lunches." To do this, Franzi would need to invest $1,000 at t=0 for the ingredients and menu development for these lunches. There's a 50-50 chance of strong ..

  All prescription drugs sales by volume

While generics account for more than three quarters of all prescription drugs sales by volume, they account for only 10% of all prescription sales revenues. It was not until after World War II, that it became clear that control over drug safety mecha..

  Which investment would investors prefer

Investments B and C both have the same standard deviation of 20% and have the same correlation to the market portfolio. If the expected return on B is 15% and the expected return on C is 18%, which investment would investors prefer? The market return..

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