What is the present value of stream of cash flows

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1. On Dec 31, Beth bought a yacht for $70,000. She paid $14,000 down and agreed to pay the balance in 15 equal annual installments that include both the principal and 14 percent interest on the declining balance. How big will the annual payments be?

a. On Dec 31, Beth bought a yacht for $70,000 and paid $14,000 down, how much does she need to borrow to purchase yacht? (round to nearest dollar)

2. The state lottery million dollar payout provides for $1 million to be paid in 25 installments of $40,000 per payment. The first payment is made immediately and the 24 remaining $40,000 payments occur at the end of each of the next 24 years. If 8 percent is the discounted rate, what is the present value of this stream of cash flows? If 16 percent is the discounted rate what is the present value of the cash flows? (round to nearest cent)

Reference no: EM131054761

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