What rate of return is built into the annuity

Assignment Help Finance Basics
Reference no: EM13305469

Suppose you just won the lottery, and you have the choice between receiving $2550000 today or a 20-year annuity of $250000, with the first payment coming a year from today. What rate of return is built into the annuity? Disregard taxes.

Reference no: EM13305469

Questions Cloud

Perception help us become more effective communicators? : How can our understanding of perception help us become more effective communicators?
How much would it cost her to buy such an annuity today : The going rate on such annuities is 7.25%. How much would it cost her to buy such an annuity today?
Determine the frequency of the moving sound source : A narrow glass tube, open at one end, closed at the other, is 40cm long. Determine the frequency of the moving sound source
Calculate the maximum strain the copper alloy can sustain : a) calculate the operational compressive strain this copper specimen is subjected to. b) calculate the maximum strain this copper alloy can sustain without becoming plastically deformed.
What rate of return is built into the annuity : Suppose you just won the lottery, and you have the choice between receiving $2550000 today or a 20-year annuity of $250000, with the first payment coming a year from today. What rate of return is built into the annuity? Disregard taxes.
A judgment against the hospital or fpmg why : She is also suing Community Hospital because the office staff members are hospital employees. In the lawsuit, is there likely to be a judgment against the hospital? Or FPMG? Why?
Obtain the electric field vector : Given the electrostatic potential field as a function of position V(x,y,z) = 5x^3 y + 5yz +z^2 , determine the electric field vector E
Determine horizontal component of reaction that pin exert : Determine the horizontal component of reaction that the pin A exerts on the two-member frame. Set F = 500 (Find Ax) Determine the vertical component of reaction that the pin A exerts on the two-member frame.
What is the lowest resonant frequency of this string : A 121 cm length of string has a mass of 2.40 g. It is stretched with a tension of 6.80 N between fixed supports. What is the lowest resonant frequency of this string

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the amount of each weekly payment

Your firm's offer consists of weekly payments for one year at an interest rate of 3 percent. What is the amount of each weekly payment?

  Contrast adjusted gross income to taxable income

Contrast adjusted gross income to taxable income. Also, address the impact of inflation on tax rates.

  Miller and modigliani model

According to the Miller and Modigliani model dividened policy is irrelevant. However, there are numerous factors in the real world that violate the MM assumptions.

  What is the bond price today

One year ago a $1,000 face value, 6% coupon bond was selling for $1,100. Since then, the market yield has decreased by two percentage points. The bond pays interest semiannually and now has four years to maturity. What is the bond's price today?

  Purchasing power parity- inflation-exchange rate

Assume that the inflation rate in united States is 4 percent and in Canada it is 5 percent. What would you expect is happening to the exchange rate between United States and Canadian dollars?

  At what price should the annual payment bond sell

The firm's Class Ann bonds have the same risk, maturity, nominal interest rate, and par value, but these bonds pay interest annually. Neither bond is callable. At what price should the annual payment bond sell?

  Plot the approximate yield curve of a much riskier lower

plot the approximate yield curve of a much riskier lower-rated company with a much higher risk of defaulting on its bonds.

  How the government will affect economic conditions

Your firm is relying on you for some insight on how the government will influence economic conditions and therefore the demand for your firm's products. Given the circumstances, what is your forecast of how the government will affect economic cond..

  Calculate stock price in one year

The current price of ADM's stock, Po, is $20 and corporation is expected to pay a $2.20 dividend next year. If the appropriate required rate of return for ADM's stock is 15%,

  Explain the concept of a real option

Finally, explain the concept of a real option and how this can help Joshua and Jim as they continue with their business.

  Computing overall net operating income

In order to receive $12,000 at the end of three years and $10,000 at the end of five years, how much must be invested now if you can earn 14 percent rate of return?

  Finance problems question

Find out the NPV of a project which is expected to pay $10,000 a year for seven years if the initial investment is $40,000 and required return is 15%?

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