CHEGG EXPERT. PLEASE HELP ME! Please round all answers to the nearest cent. The
ID: 2765453 • Letter: C
Question
CHEGG EXPERT. PLEASE HELP ME! Please round all answers to the nearest cent.
The state lottery's million-dollar payout provides for $1.1 million to be paid in 20 installments of S55.000 per payment. The first 555,000 payment is made immediately, and the 19 remaining S55,000 payments occur at the end of each of the next 19 years. If 6 percent is the discount rate, what is the present value of this stream of cash flows? If 12 percent is the discount rate, what is the present value of the cash flows?Explanation / Answer
Year Inflow(A) PV Factor @ 6% (B) PV (A*B) PV Factor @ 12% (C ) PV(A*C) 0 55000 1 55000 1 55000 1 55000 0.9434 51886.79245 0.8929 49107.14 2 55000 0.8900 48949.8042 0.7972 43845.66 3 55000 0.8396 46179.06057 0.7118 39147.91 4 55000 0.7921 43565.15148 0.6355 34953.49 5 55000 0.7473 41099.19951 0.5674 31208.48 6 55000 0.7050 38772.82972 0.5066 27864.71 7 55000 0.6651 36578.14125 0.4523 24879.21 8 55000 0.6274 34507.68042 0.4039 22213.58 9 55000 0.5919 32554.41549 0.3606 19833.55 10 55000 0.5584 30711.71273 0.3220 17708.53 11 55000 0.5268 28973.3139 0.2875 15811.19 12 55000 0.4970 27333.315 0.2567 14117.13 13 55000 0.4688 25786.14622 0.2292 12604.58 14 55000 0.4423 24326.55304 0.2046 11254.09 15 55000 0.4173 22949.57834 0.1827 10048.29 16 55000 0.3936 21650.5456 0.1631 8971.691 17 55000 0.3714 20425.04302 0.1456 8010.439 18 55000 0.3503 19268.90851 0.1300 7152.177 19 55000 0.3305 18178.21558 0.1161 6385.873 Present Value 668696.407 460117.7