How much is the choice worth today

Assignment Help Finance Basics
Reference no: EM131944640

Question: Ben just won the lottery and has a choice between accepting a lump sum payment of $5,000,000 or annual payments of $375,000 at the end of each yearfor the next 30 years, which he could than invest in a financial instrument that will pay him 6%. Ben decides to take the annual payments.

How much is the choice worth today?

Reference no: EM131944640

Questions Cloud

What should be the price per share for this company : The discount rate is 8%, the firm has debt totaling $55 million, and 9 million shares outstanding. What should be the price per share for this company?
Evaluate eaton coaching skills : Was Robert Eaton a Good Coach on pages 256-257 in the textbook and the Major Functions and Key Behaviors tables on page 257
Company weighted average cost of capital and cost of debt : What is the company’s cost of debt? What is the company’s weighted average cost of capital?
Describe the factors that influence leadership style : Describe the factors that influence your leadership style. Why these leadership behaviors are likely to have a positive or negative effect on individual
How much is the choice worth today : Ben just won the lottery and has a choice between accepting a lump sum payment of $5,000,000 or annual payments of $375,000 at the end of each year.
Macro environment in a public institution : Discuss the influence of external or macro environment in a public institution?
Analyse the organizational structure and culture : Analyse the organizational structure and culture for both organizations - What is the mode of communication adopted by both organisations
Servers and receivers possible choices and possible : When we talk about Game Theory in Tennis and we specifically talk about the servers and receivers possible choices and their possible outcomes
Compare debt-financing and equity-financing : Compare debt-financing and equity-financing when funding a new venture.

Reviews

Write a Review

Finance Basics Questions & Answers

  Explain the higher p/e ratio enjoyed by firm b

How do you explain the higher P/E ratio enjoyed by firm B as compared to firm A.

  Difficult in the field of life insurance

Do you think that loss adjustment would be most difficult in the field of life insurance, property insurance, or liability insurance?

  Equity and debt-wal-mart

Examine the structure and activities in Wal-Mart and identify two projects or events which required an investment. One should be the 'current project' and other long-term investment project.

  What did you find surprising about credit reports

What did you find surprising about credit reports? What type of information is included on your credit report? The type of information that is included on my credit report is my name , current and previous address, and work history.

  Difference between public and private corporation

The difference between public and private corporation is that a public corporation has offered its stocks available for purchase through the stock exchange and therefore they have to file quarterly earning reports and its information is available ..

  Calculate the gross margin ratio for each year

The Quality of Gross Margins: Vitesse Semiconductor Corp. (Easy) Vitesse Semiconductor reported the following revenues and cost of goods sold for 2001- 2003.

  Cost of common equity using the capm

Hetterbrand's CFO has asked his financial analyst to estimate the firm's cost of common equity using the CAPM as a way of validating the earlier calculations.

  How do you think technology can be used best to socialize

How do you think technology can be used best to socialize new employees and get them productive as quickly as possible? When would using technology

  Discuss the distributions of principal

Discuss the distributions of principal, interest, and the balance over the life of the loan.

  Which stock should you choose

(Preferred stock expected return) You are planning to purchase 100 shares of preferred stock and must choose between Stock A and Stock B.

  What should be the hedge ratio

Verify your answer using the risk-neutral approach-do not just say that you have the same answer; you will need to show the work that the two approaches give the same answer.

  What are the two major categories of long-term assets

WorldCom committed the largest fraud in U.S. history. What was the primary method WorldCom's management used to carry out the fraud?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd