The Caldwell Herald newspaper reported the following story: Frank Ormsby of Cald

Question

The Caldwell Herald newspaper reported the following story: Frank Ormsby of Caldwell is the state's newest millionaire. By choosing the six winning numbers on last week's state lottery, Mr. Ormsby has won the week's grand prize totaling $1.44 million. The State Lottery Commission has indicated that Mr. Ormsby will receive his prize in 20 annual installments of $72,000 each Click here to view Exhibit 118-1 and Exhibit 11B.2, to determine the appropriate discount factor(s) using tables. Required: 1. If Mr. Ormsby can invest money at a 12% rate of return, what is the present value of his winnings? (Use the appropriate table to determine the discount factor(s)-) Net Present Value Present Value Factor ValueNet Present Value

Explanation / Answer

1. Net Present Value

Present Value × Factor Value = Net Present Value $72,000 × 7.469 = $537,768

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---