What is the present value of this investment

Assignment Help Financial Management
Reference no: EM13987747

You win a scratch off lottery ticket that promises to pay an initial payment of 1,000 this year and grow at a rate of 5% forever. If the discount rate is 6%, what is the present value of this investment?

Reference no: EM13987747

Questions Cloud

The statistics budget : The statistics budget:
Funds left in this bucket in your parents portfolio : Your brother Adam has decided to enter graduate school in 4 years. Your parents have been saving $ 5000 per year for the last 7 years. The 4 years have passed and he chooses Officer’s Training School instead. With a degree in finance you know that th..
Describe the size-structure and composition of mutual fund : Describe the size, structure and composition of the mutual fund industry. Do you consider these characteristics as having a positive or negative impact on investors? Why?
Legitimate areas of community benefit : The Catholic healthcare association recognizes which of the following as legitimate areas of community benefit?
What is the present value of this investment : You win a scratch off lottery ticket that promises to pay an initial payment of 1,000 this year and grow at a rate of 5% forever. If the discount rate is 6%, what is the present value of this investment?
Cash flows from operations and free cash flows : Determine the after cash flows from operations and free cash flows. Prepare a statement of free cash flows using table below.
Critical drivers that influence performance attainment : Which of the following is not one of the four critical questions that must be answered for dashboard reporting? What is the firm's strategic vision? what is most important to the firms success? what are critical drivers that influence performance att..
Net income and cash flow from operations : Using the following information below, prepare cash flow statement using the table below. Determine the following: net income, cash flow from operations, cash flow from investment activites cash flow from financing activities, increase in cash and en..
Securities-which portfolio has the lowest risk : Suppose there are three securities (A, B, and C) to choose from to create your portfolio. Next year the economy will be in an expansion, normal, or recession state with probabilities 0.40, 0.33, and 0.27, respectively. where the numbers inside parent..

Reviews

Write a Review

Financial Management Questions & Answers

  Explain the relationship between npv and a firms value

Explain the relationship between NPV and a firm's value. What is the cost of capital? What role does it play in capital investment decisions?

  How should he trade to benefit from the opportunity

Call and put options have a strike price of 20 eur and expiration date in 3 months. Both options are sold at 3 eur. The risk free interest rate is 10% per annum, the current stock price is 20eur. Identify the arbitrage opportunity for investor. How s..

  What would be its weight on common equity

Raymond co. has 2.3 million of debt, 1 million of preferred stock, and 2.2 million of common equity. what would be its weight on common equity?

  When striving for effective focus group results

When striving for effective focus group results, _______.

  Effective annual return on its consumer loans

Magnus Credit Corp. wants to earn an effective annual return on its consumer loans of 16.25 percent per year. The bank uses daily compounding on its loans. What interest rate is the bank required by law to report to potential borrowers?

  Describes portfolio that plots above security market line

Which of the following describes a portfolio that plots above the security market line? . A. The security is overvalued. B. The security is undervalued. C. The security is providing a return that is less than expected. D. The security’s beta is too h..

  Difference in annual inflation rates

Suppose the spot and three-month forward rates for the yen are 79.75 and 79.08, respectively. What would you estimate is the difference between the annual inflation rates of the United States and Japan? (Negative amount should be indicated by a minus..

  Projected liabilities and owners equity

When projected assets are more than projected liabilities and owners’ equity, the plug will be

  Number of pints made and sold to the nearest integer

Initially, you have lost 20,000 dollars in the stock market and you continue to lose 350 dollars per month. In how many months will it be before your losses total 33,040 dollars, thus your balance is - 33,040? What is the monthly breakeven point for ..

  Prior law had restricted the ability of acquirers to credits

In September, 2008, the IRS changed tax laws to allow banks to utilize the tax loss carry forwards of banks they acquire to shield their future income from taxes (prior law had restricted the ability of acquirers to use these credits).

  Yield to maturity and required returns

The Brownstone Corporation's bonds have 6 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 9%. What is the yield to maturity at a current market price of $812?

  Used quarterly compounding rather than annual compounding

Suppose you deposit $1000 into a savings account that pays 8 percent. If the bank compounds interest annually, how much will you have in your account in 4 years? What would your balance be in 4 years if the bank used quarterly compounding rather than..

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