Please answer the questions below: Question 25 You just one a lottery of $1,000,

Question

Please answer the questions below:

Question 25 You just one a lottery of $1,000,000 but the fine print on your ticket indicates that they will pay you the winnings by giving you 20 annual payments (starting today) of $50,000 The present value of this at 5% discount would be: (hint draw a time diagram of the cash flows) $935,789 $748,654 $654,266 $623,110 $611,549 Question 26 The following is NOT current liabilities: Accounts payable ort-term notes payable to the bank Accrued wages Cost of goods sold Accrued payroll taxes

Explanation / Answer

Hi,

Please find the detailed answers as follows:

Question 25:

Nper = 20 (indicates the period)

Rate = 5% (indicates the discount rate)

PMT = 50000 (indicates annual payment)

FV = 0 (indicates future value, if any)

Type = 1 (indicates annuity due)

PV = ? (indicates present value)

Present Value = PV(Rate,Nper,PMT,FV,Type) = PV(5%,20,50000,0,1) = $654266.

Option C ($654266) is the correct answer.

Question 26:

Option D (Cost of Goods Sold) is the correct answer.

Thanks.

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