What is the present value of her lottery winnings

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Reference no: EM13877831

1) If the APR is 15 percent, what is the effective annual interest rate (EAR), in percent, if the compounding is monthly?

2) a) Sharon Kabana won the state lottery and will receive a payment of $89,729.45 at the end of each year for the next 20 years. If the going rate of interest is 7.25 percent, what is the present value of her lottery winnings?

b) What is the present value of Sharon Kabana's lottery winnings (above) if the payments begin today instead of one year from today?

3) Assume you will start working as soon as you graduate from college. You plan to start saving for your retirement on your 25th birthday and retire on your 65th birthday. After retirement, you expect to live until you are at least 85. You wish to be able to withdraw $40,000 every year from the time of your retirement until you are 85 years old (i.e., for 20 years). What is the dollar amount you need to invest every year, starting at age 26 and ending at age 65 (i.e., for 40 years), to be able to accomplish this plan if the interest rate is 10 percent?

Reference no: EM13877831

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