What is the present value of the lottery prize

Assignment Help Financial Management
Reference no: EM131943093

A lottery winner wins a $50,000/year prize ends upon the death of the winner. However, the lottery winner, who is a scientist, discovers a drug that makes him immortal, meaning the payments will continue to perpetuity. What is the present value of the lottery prize if the discount rate is 10%?

Reference no: EM131943093

Questions Cloud

What is current stock price : Investors require a return of 11 percent on the company’s stock. What is the current stock price? What will the stock be in 3 years?
Differentiate between bankruptcy and agency costs : Differentiate between Bankruptcy and Agency Costs
What is the required rate of interest to achieve this goal : A student beginning their career has $10,000 in savings. What is the required rate of interest to achieve this goal?
Determine the irr using interpolation : Determine the IRR using interpolation. With a cost of capital of 16 percent, should the machine be purchased?
What is the present value of the lottery prize : What is the present value of the lottery prize if the discount rate is 10%?
What is the internal rate of return and net present value : If the cost of capital is 13 percent, what is the net present value? What is the internal rate of return?
Calculate the future value and net present value : Calculate the future value of the following cash flows with an annual interest rate of 3%.
Compute the risk-adjusted net present value : Compute the risk-adjusted net present value for Windy Acres and Hillcrest. Which investment should Mr Backster accept if two investment is mutually exclusive.
Calculate the present value of ordinary annuity : Calculate the present value of an ordinary annuity given the following information:

Reviews

Write a Review

Financial Management Questions & Answers

  About the inflation adjustments

The Rodriguez Company is considering an average-risk investment in a mineral water spring project that has a cost of $130,000. The project will produce 800 cases of mineral water per year indefinitely. What is the NPV of the project? Do not round int..

  Time value of money-basics

Time Value of Money: Basics. The future value in three years of $1,000 deposited today in a savings account with interest compounded annually at 8 percent.

  Pros and cons of foreign direct investment for corporations

What are the pros and cons of foreign direct investment for corporations?

  Explain the steps and compute the profit

Explain the steps and compute the profit. At what cross-rate, triangular arbitrage will NOT be feasible or profitable?

  What was the closing price for this stock that appeared

If the company currently has 33 million shares of stock outstanding, what was net income for the most recent four quarters?

  What is the after-tax cash flow from the sale

Your firm purchased machinery with a 7-year MACRS life for $9.90 million. what is the after-tax cash flow from the sale of the machinery

  Calculate approximate percent increase in price for bond

Calculate the approximate percent increase in price for this bond using the duration/convexity adjustment method

  Ten-year fixed-rate investments

A company’s investments earn LIBOR minus 0.60%. Explain how it can use the quotes in Table 5.5 to convert them to (a) three-, (b) five-, and (c) ten-year fixed-rate investments.

  What will be firm operating cycle

Suppose that LilyMac Photography has annual sales of $231,000, What will be the firm’s operating cycle?

  Sell currencies in different foreign exchange markets

Here are some quotes at which you can buy/sell currencies in different foreign exchange markets: Is it possible to do an arbitrage? if yes, explain the steps and calculate your gain if you use $1000,000 for your arbitrage?

  The dividend growth rate is expected to be constant

The dividend growth rate is expected to be constant at 7% for 4 years, after which dividends are expected to grow at a rate of 5% forever.

  What was most recent dividend per share paid on the stock

Mustaine Corporation stock currently sells for $79 per share. The market requires a return of 9.6 percent on the firm’s stock. If the company maintains a constant 2.8 percent growth rate in dividends, what was the most recent dividend per share paid ..

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