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Present value of choices

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1) If I just won the lottery and I am determining how to deal with it. I have two choices. Choice A will pay $2,000,000 currently and choice B will pay $2,750,000 at the end of 5 years.

Using a discount rate of 5%, based on present value, what are the dollar values of choices A and B? Assume the person does not need the funds now and also calculate your answers without tax consequences. Using the same discount rate of 5% based on future values, what are the dollar values of choices A and B?

I have to provide 4 answers to provide: the present value of choices A and B and the future value of choices A and B. Please do not repeat the question. Also, so please label each answer very clearly.

2) Suppose I intend to buy a car for $12,000. (S)he has $3,000 cash for a down payment and plans to borrow $9,000. The only financing (s)he can get is an add-on rate loan. I borrow $9,000 for 4 years at an add-on interest rate of 11%. A) What is the total interest on the loan for the full term? B) What is the total cost of the car? C) What is the monthly payment? D) What is the annual percentage rate (APR).

Reference no: EM132403300

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