Calculate the present value of plan

Assignment Help Business Economics

Reference no: EM131001159

Suppose that you win the state lottery. You have two options to receive your winnings. Plan 1 pays you a lump-sum amount of $300,000. Plan 2 pays you $20,000 today, $100,000 after one year, and $200,000 after two years. Assume that the current interest rate is 6%.

1) Using the Excel spreadsheet, calculate the present value of Plan 2. To do this, calculate the present value of each payment. Then sum these three present values in the cell marked "Total." Please enter a whole number, with no decimal point.

2) True or false: You choose Plan 1 because it gives a higher present value.

Reference no: EM131001159

Questions Cloud

What is the effect of freeze on the nominal-real earnings : Developed produces two goods, manufactures and food, using three factors of production: capital, land and labor. The production of manufactures requires capital and labor, while the production of food uses land and labor. All the arable land is in th..

What is the residual demand function for the dominant firm : The average avoidable cost for a fringe firm is AAC(q) = 20/q = 5q. The marginal cost function for a fringe firm is MC = 10q . There are 10 fringe firms. The marginal cost of the dominant firm is 2 and the demand function is Q = 100 - P. What is the ..

Differences in voice usage in crossover : Please write 2 page essay talking about styles, vocal techniques, differences in voice usage in crossover / classical repertoire, your thoughts, preferences, etc. I would like you to be original and free with your opinions as I am more interested ..

When the company has been proven to be unethical : Larger companies like Toyota and VW will ultimately survive - they have a good deal of money and power to ride out the storm. Toyota is still a top seller - even with all the problems they have had and continue to have. Can you explain why? Why would..

Calculate the present value of plan : Suppose that you win the state lottery. You have two options to receive your winnings. Plan 1 pays you a lump-sum amount of $300,000. Plan 2 pays you $20,000 today, $100,000 after one year, and $200,000 after two years. Assume that the current intere..

Average male score on the math portion : For the years 1967 to 1990 (note this gives 24 observations) the average male score on the math portion of the SAT was 500 with a variance of 46.61 and the average female score on the math portion of the SAT was 453.67 with a variance of 83.88. Assum..

Belief qualify as a bona fide occupational qualification : When can an employee’s religious belief qualify as a bona fide occupational qualification? Do you believe religious hiring is BFOQ? Can a person claim to be discriminated against because of his or her spouse's national origin? Multimatrix, Inc., has ..

Evaluate the management of each companys investment : Obtain annual reports from three corporations in the same primary industry and compare the management of each company's investment in receivables.

The workers in the more dangerous jobs be paid : Assume the value of a statistical life is $85,000,000 and that workers in more dangerous jobs are exposed to an additional 1/105 risk of death. How much more should the workers in the more dangerous jobs be paid (compared to the other workers)?

User Account

All Pages