All categories

2 years ago

The $40 million lottery payment that you have just won actually pays $2 million per year for 20 years. The interest rate is 8%.

Business

1 answer:

Lyrx [107]2 years ago

5 0

Answer:

Explanation:

We will apply the annuity formula because payments are made equally at year end for 40 years. we would have applied compound formula if total payment was made at year 40.

Total Payment = $40 mill.

Annual Payment = 2 mill.

Total time for payments =20

Ir = 8%

Present Value of innings applying annuity formula

P=R(1-(1+i)^-n)/i

P=2(1-(1+8%)^-20)/8%

P=2(1-0.2145)/8%

P=2*9.8181

P=19.6362

Present Value of innings applying annuity formula with Advance payment

Value of the first payment is same because it is paid at day 1 so present value is same i.e $2 mill.

Present Value of other 19 Payments with 19 years time from today

Applying the same formula

P=R(1-(1+i)^-n)/i

P=2(1-(1+8%)^-19)/8%

P=2(1-0.2317)/8%

P=2*9.6035

P=19.207

Present value of 1st payment at Year.0 = 2 mill

Present value of 19 payment at Year.0 = 19.207

Total Value =2+19.207 = $21.02 mill

You might be interested in

Lake Corporation is considering the elimination of one of its segments. The segment incurs the following fixed costs. If the seg

77julia77 [94]

Answer:

the amount of avoidable cost associated with the segment is $754,000

Explanation:

The cost associated with the segment to be eliminated including:

- Advertising expense $140,000

- Supervisory salaries $300,000

- Allocation of companywide facility-level costs $130,000

- The loss for unsold building (*): $60,000

- Maintenance costs on equipment $112,000

- Real estate taxes on building $12,000

The total cost is $754,000

(*) The earning from sold building (book value) = Market value of building $160,000 - Book value of building $100,000 = $60,000

3 0

2 years ago

1. Using income statement data for Neros, prepare a December income statement dated December 31. 2. If Neros pays a cash dividen

Alenkinab [10]

Answer:

A decision to convert to rental should consider factors such as the taxpayer’s marginal tax rate, availability of excluding gain from the sale of a personal residence, expected growth rate of the rental property, length of time the house will be rented before being sold, cash flow from renting, effect of the passive activity rules, and rate of return on other invested funds.

How rent-to-own investments solve cash flow issues. HomeNews. by Neil Sharma 19 Mar 2019.. and you can redirect that equity to buy rent-to-own properties.". where she explained how a single investor helped seven families become homeowners while cash flowing $60,000 a year.

6 0

2 years ago

Antarctica has been continuously glaciated for the last __________ years. geology

o-na [289]

Answer:

15 million years

Explanation:

Antarctica is the continent that is spread around the South Pole, known for being covered with ice, and being the coldest place on the planet. The glaciation of the continent started around 34 million years, started to speed up since 23 million years ago, and became dominant on this continent only around 15 million years ago. Antarctica has not always been covered in ice, and in fact, through the majority of its geologic history Antarctica has been covered with dense forests. This was possible because the continent was much further north, relatively close to the Equator, thus its climate was tropical, subtropical, and temperate. That all started to change as first Pangaea, and then Gondwanaland broke apart, and Antarctica was the piece that was moving toward the South Pole. As Africa, India, Australia, and at last South America drifted apart from Antarctica, the continent was left surrounded by ocean waters where very cold ocean currents occurred because of the continental drift. On top of it the continent got into a place where the sunlight is very weak, thus gradually it started to freeze and had become almost entirely glaciated.

3 0

2 years ago

Read 2 more answers

Revenue & Sales Corporation and Software, Inc., enter into a contract for the design of custom software for which Revenue &a

Colt1911 [192]

Answer:

An Assignment

Explanation:

Assignment in contract occurs when a party to a contract transfers the contract's obligations and benefits to another party so that the new party can take over the contacts obligation and right.This is guided by an assignment agreement that shows the intent to transfer the rights and obligation.

The process of contract assignment involves the assignor and the assignee. The assignor is the party that transfers its right and obligation while the assignee is the party that receives the right and obligation

6 0

2 years ago

Which Marriott Luxury brand is MOST LIKELY to provide the timeless glamour of its heritage in pristine locations while offering

Korvikt [17]

Answer:

Bvlgari Hotel

Explanation:

Marriott international hotel brand has joined Bvlgari to launch a new luxury brand of hotels to provide the timeless glamour of its heritage in pristine locations while offering flawless luxury service. Marriot International, inc. is one of the largest hospitality companies in the world. They have announced a joint venture with Bvlgari hotel & resort. Bvlgari hotel & resort is famous for its unique Italian hotel design concept, it has a global footprint, its aims to convey the excitement about the Bvlgari brand and its heritage of magnificent Roman jeweller.

4 0

2 years ago