Jacques just won the lottery and must choose between three award options:1. A lump sum of $15,000,000 received today2. 15 end-of-year payments of $1,875,0003, 40 end-of-year payments of $1,350,000For each option in the table, indicate which values to enter for each variable in your financial calculator.Option 1Option 2Option 340 PaymentsLump Sum Payment15 PaymentsNo. of PeriodsAnnual paymentFuture ValuePresent ValueFV=07Assume the interest rate is 8.00%, entered as 8 on your financial calculator.Note: Take the absolute value of the present value when answering this question.Using the table you just filled out, along with a financial calculator, yields a present value for option 2 of approximatelypresent value for option 3 of approximatelyif he seeks to maximize present value.$15,000,000FV-07and a(when the interest rate is 8.00%). Based on this, Jacques should choose optionNow assume the interest rate is 9.00%, entered as 9 on your financial calculator. Now assume the interest rate is 9.00%, entered as 9 on your financial calculator.Note: Take the absolute value of the present value when answering this question.Using the table you just filled out, along with your financial alculator, yields a present value for option 2 of approximatelya present value for option 3 of approximatelyif he seeks to maximize present value.Assume the interest rate is 10.00 % , entered as 10 on your financial calculator.and(when the interest rate is 9.00%). Based on this, Jacques should choose optionNote: Take the absolute value of the present value when answering this question.Using the table you just filled out, along with your financial calculator, yields a present value for option 2 of approximatelya present value for option 3 of approximatelyoptionif he seeks to maximize present value.As the interest rate increases, option 1 becomesattractive.(when the interest rate is 10.00 %). Based on this, Jacques should chooseand

Three options of Annuity payment are given and we have to determine the present value with different…

Jacques just won the lottery and must choose between three award options: 1. A lump sum of $15,000,000 received today 2. 15 end-of-year payments of $1,875,000 3. 40 end-of-year payments of $1,350,000 For each option in the table, indicate which values to enter for each variable in your financial calculator. Option 1 Option 2 Option 3 Lump Sum Payment 15 Payments 40 Payments No. of Periods Annual payment Future Value Present Value $15,000,000 FV=0 7 FV-0 Assume the interest rate is 8.00%, entered as 8 on your financial calculator Note: Take the absolute value of the present value when answering this question. Using the table you just filled out, along with a financial calculator, yields a present value for option 2 of approximately present value for option 3 of approximately if he seeks to maximize present value. and a (when the interest rate is 8.00%). Based on this, Jacques should choose option Now assume the interest rate is 9.00%, entered as 9 on your financial calculator.

Jacques just won the lottery and must choose between three award options: 1. A lump sum of $15,000,000 received today 2. 15 end-of-year payments of $1,875,000 3. 40 end-of-year payments of $1,350,000 For each option in the table, indicate which values to enter for each variable in your financial calculator. Option 1 Option 2 Option 3 Lump Sum Payment 15 Payments 40 Payments No. of Periods Annual payment Future Value Present Value $15,000,000 FV=0 7 FV-0 Assume the interest rate is 8.00%, entered as 8 on your financial calculator Note: Take the absolute value of the present value when answering this question. Using the table you just filled out, along with a financial calculator, yields a present value for option 2 of approximately present value for option 3 of approximately if he seeks to maximize present value. and a (when the interest rate is 8.00%). Based on this, Jacques should choose option Now assume the interest rate is 9.00%, entered as 9 on your financial calculator.

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money

Section: Chapter Questions

Problem 9.20MCE

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