Assume you win a lottery, and you are offered the following stream of payments by the lottery commission: $25,000 today, $32,000 one year from now, another $32,000 two years from now, and a final payment of $55,000 three years from now. You accept the offer. If you invest all of these proceeds at 6% compounded annually and extract nothing from the investment, how much will you have at the end of the fourth year? Excel Formula Please
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Assume you win a lottery, and you are offered the following stream of payments by the lottery commission: $25,000 today, $32,000 one year from now, another $32,000 two years from now, and a final payment of $55,000 three years from now. You accept the offer. If you invest all of these proceeds at 6% compounded annually and extract nothing from the investment, how much will you have at the end of the fourth year?
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- Assume you win a lottery, and you are offered the following stream of payments by the lottery commission: $25,000 today, $32,000 one year from now, another $32,000 two years from now, and a final payment of $55,000 three years from now. You accept the offer. If you invest all of these proceeds at 6% compounded annually and extract nothing from the investment, how much will you have at the end of the fourth year?Assume you win a lottery, and you are offered the following stream of payments by the lottery commission: $25,000 today, $32,000 one year from now, another $32,000 two years from now, and a final payment of $55,000 three years from now. You accept the offer. If you invest all of these proceeds at 6% compounded annually and extract nothing from the investment, how much will you have at the end of the fourth year? (RESOURCE: Timing of Cash Flows) NOTE: You can use this equation FV=PV x (1+i)^n or in excel you can use =FV(RATE, NPER(1), 0, AMOUNT(1)), FV=(RATE, NPER(2),0,AMOUNT(2)...... Then add the totals of each rowYou just won the lottery and are offered the following payout: $1,000,000 immediately plus another 6 payments that increase by $500,000 per year. Thus in year one, you receive $1,500,000, etc. The EAR you expect to earn on reinvestment of your money is 8.5%. What is the minimum amount you should be willing to accept as a lump sum today rather than the payout over time? How does the return given in the form of EAR impact your answer?
- An investment offers to pay you $8,000 a year for five years. If it costs $28,840, what will be your rate of return on the investment? Use Appendix D to answer the question. Round your answer to the nearest whole number. %An investment pays you $100 at the end of each of the next 3 years. The investment will then pay you $200 at the end of year 4, $300 at the end of year 5, and $500 at the end of year 6. If the rate of interest earned on the investment is 8%, what is the present value of this investment? What is its future value? How do you solve this with excel?You just won the lottery and are offered the following payout: $1,000,000 immediately plus another 6 payments that increase by $500,000 per year. Thus in year one, you receive $1,500,000, etc. The EAR you expect to earn on reinvestment of your money is 8.5%. What is the minimum amount you should be willing to accept as a lump sum today rather than the payout over time?
- An investment offers to pay you $10,000 a year for four years. If it costs $27,980, what will be your rate of return on the investment? Use Appendix D to answer the question. Round your answer to the nearest whole number.Suppose you invest $2,000 today and receive $11,000 in five years. a. What is the internal rate of return (IRR) of this opportunity? b. Suppose another investment opportunity also requires $2,000 upfront, but pays an equal amount at the end of each year for the next five years. If this investment has the same IRR as the first one, what is the amount you will receive each year?Suppose, you have won a lottery prize You have two payment options: A: Receive $20,000 now B: Receive $5,800 a year paid for four years and interest rate is 8%.
- Imagine that you won $100 million in the lottery and were offered the choice between two payment plans: Plan A: Receive $61 million in a lump sum today Plan B: Receive an initial payment of $1.5 million today and annual payments that increase by 5% annually over the next 29 years (30 payments total) a. Determine the net present value of each plan without discounting. Which plan is the better option? b. Assuming an interest rate of 4%, determine the future value of each plan at the end of the 29 years with discounting. Which plan is the better option?You have just won 50 million in the lottery, payable in equal yearly installments over the next 20 years (first payment to be made immediately). Instead of taking the annual payments, you also have the option of receiving a lump sum amount immediately. If the interest rate is 6% per year, what is the minimum lump sum amount you would except in place for the payments? What if the interest rate is 10% per year? Please show the formula and answer.1. Suppose you win the lottery and are given the following three options: (1) Receive 30 million dollars today; (2) receive 2 million dollars per year over the next 25 years; or (3) receive 1 million dollars per year indefinitely (being passed on to your heirs). Which is the best deal, assuming that the annual interest rate is 4%? We answer this by working through the following sequence of questions. a. How much are the 2 million dollars received annually over the course of 25 years worth in terms of today's dollars, assuming an annual interest rate of 4%? b. Use the answer to part a. to find a general formula for the present value of payments of C dollars received each year over the next n years, assuming an average annual interest rate r. c. Find a formula for the present value if annual payments of C dollars continue indefinitely, assuming an average annual interest rate r. d. Use the answer to part c. to determine the present value of 1 million dollars paid annually indefinitely.…