The writer is very fast, professional and responded to the review request fast also. Thank you.
Hello, Taking a Finance 6500-level course. I generally understand TVM, but I’m having difficulty wrapping my head around how to solve for the first part of problem. I have solved for the 2nd part of the problem. I need to format the solution for the first part similar to how I show solving the second part.
In 2016 A Pevely man won the Missouri lottery and was given the choice of receiving $6.8 million in cash
immediately, or 25 annual payments of $400,000 each (also beginning today). At what interest rate
would he be indifferent between the two options? Suppose he believes he could earn 6% annually on
his investments. Which option should he take?
Question 5b) Suppose he could earn 6% annual interest on his investments. Which options should he take?
Lump Sum Calculation
1. Clear All (Orange Button, C/C All)
2. 6,800,000 PV (Present Value) button
3. 6.0 I/YR (Interest/ Year) button
4. 25 N (Number of Years) button
5. 0 PMT (Payment Amount button
6. Press FV for Future Value calculation
Lump Sum Future Value = 29,184,720.89
Annuity Payment Calculation
1. Clear All (Orange Button, C/C All)
2. 0 PV (Present Value) button
3. 6.0 I/YR (Interest/ Year) button
4. 25 N (Number of Years) button
5. 400,000 PMT (Payment Amount button
6. Press FV for Future Value calculation
Annuity Payment Future Value = 21,945,804.80
He should choose the Lump Sum Payment
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more