Surname 1NameProfessors NameCourseDateFinancial ManagementA. You have just won the Lottery jackpot of $11,000,000. You will be paid in 26 equalannual installments beginning immediately. If you had the money now, you couldinvest it in an account with a quoted annual interest rate of 9% with monthlycompounding of interest. What is the present value of the payments you willreceive?PV = A * [1 - (1 + r) ^ (-n)] / rHere:A = 11000000 / 26 = 423076.92r is the effective rate of 9% monthly compoundedr = (1 + 0.09/12) ^ (12) - 1 = 1.0938 - 1 = 0.0938n = 26Then, PV:Quoted Annual Interest Rate = 9%Compounded Period = 12 periods in a yearMonthly Compounded interest rate = 0.075 (9%/12)Calculate Effective Percentage Rate (EFF)EFF = (1+0.0075) ^ 12 - 1.0 (1.0075) ^12 -1.01.093807 - 1.00.0938079.3807%Future Value No. of periodsSurname 2$11,000,000/26 periods = $423,076.92Calculate Present ValuePV = (rate,nper,pmt,fv,type)Rate = 0.093807No. Periods =26Pmt =423,076.92Future Value =0Type = 1PV = (0.09387, 26, 423,076.92, 0, 1)PV = $4,453,789.94Present value of the payments to receive is $4,453,789.94.B. In your own words and using various bond websites, please l ...
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