Calculates the internal rate of revenue

Assignment Help Financial Management

Reference no: EM131048000

A lottery winner can take $6 million now or be paid $600,000 at the end of the next 16 years. The winner calculates the internal rate of revenue (IRR) of taking the money at the end of each year and estimating that the discount rate across this period will be 4%, decides to take the money at the end of each year. Was her decision correct? Why?

Reference no: EM131048000

Questions Cloud

What price maximizes profits : Your dealings on the secondhand market lead you to believe that there is a 0.4 chance a random buyer will pay $300,000, a 0.25 chance the buyer will pay $350,000, a 0.1 chance the buyer will pay 400,000, and a 0.25 chance it will not sell. If you ..

Cohesiveness and relationships within an organization : Pay is stressed in several of the cases and some of the content in the reading. How much influence do pay differentials between employees at different levels have on commitment, cohesiveness and relationships within an organization?

Define the meaning of industrial robotics : The purpose of this course is to enable me to: learn about a versatile field of Industry Robotics to upgrade my skills in Electro-technology - define the meaning of Industrial Robotics

The corporate structure of mutual insurers : The corporate structure of mutual insurers has changed over time. Briefly describe several trends that have had an impact on the corporate structure of mutual insurers.

Calculates the internal rate of revenue : A lottery winner can take $6 million now or be paid $600,000 at the end of the next 16 years. The winner calculates the internal rate of revenue (IRR) of taking the money at the end of each year and estimating that the discount rate across this perio..

Financial safeguards to protect insureds : A newspaper reporter wrote that "Lloyds of London is an association that provides physical facilities and services to the members for selling insurance. The insurance is underwritten by various syndicates who belong to Lloyd's." Describe Lloyd's o..

Compute the mean median mode and standard deviation : A random sample of 20 cars driving down I-294 is selected and their speed is monitored. Compute the mean, median, mode, and standard deviation, Q1, Q3, Min, and Max for the above sample data on speed per car

Mergers and acquisitions among insurers : A luncheon speaker stated that "the number of life insurers has declined sharply during the past decade because of the increase in company mergers and acquisitions, demutualization of insurers, and formation of mutual holding companies."

Compare a stock insurer to a mutual insurer : Compare a stock insurer to a mutual insurer with respect to each of the following: a. Parties who legally own the company

User Account

All Pages