You have just won $50,000 on your Scratch and Win ticket, but you won\'t be awar
ID: 2738418 • Letter: Y
Question
You have just won $50,000 on your Scratch and Win ticket, but you won't be awarded the money until your 40th birthday, 20 years from now. If the appropriate discount rate is 15%, what is the present value of your winnings? a.$3,055.01 b.$3,513,27 c.$2,656.53 d.$3,048.78 e.$3,067.49
In payment for his help with the construction of Valhalla, Wotan offers Fafner two alternatives. First, he offers $1,260 per year forever (with the first payment in one year). Second, he offers his sister-in-law, Freia (the girl with the golden apples). If Fafner thinks that Freia is worth $12,000 and his required rate of return is 10.5%, which of the following is correct?
Freia is more valuable.
The perpetuity is more valuable.
c. The two are equal in value. He is indifferent between them.
A 10-year ordinary annuity that provides a return of 7% has a present value of $15,000. What are the annual annuity payments?
$2,135.66
$2,038.02
$2,235.44
$1,500.00
$2,232.84
a.Freia is more valuable.
b.The perpetuity is more valuable.
c.c. The two are equal in value. He is indifferent between them.
A 10-year ordinary annuity that provides a return of 7% has a present value of $15,000. What are the annual annuity payments?
a.$2,135.66
b.$2,038.02
c.$2,235.44
d.$1,500.00
e.$2,232.84
Explanation / Answer
1)use pv formaule in excel to find it
=pv(rate,nper,pmt,fv,type)
rate=15%
nper=20
pmt
fv=50,000
type=0
=PV(15%,20,,-50000,0)
=$3055.01
It is option A
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