Showing posts with label Francis Peabody. Show all posts
Showing posts with label Francis Peabody. Show all posts

Tuesday, July 6, 2021

Francis Peabody just won the $89,000,000 California State Lottery. The lottery offers the winner a choice of receiving

Francis Peabody just won the $89,000,000 California State Lottery. The lottery offers the winner a choice of receiving the winnings in a lump sum or in 26 equal annual installments to be made at the beginning of each year. Assume that funds would be invested at 7.65%. Francis is trying to decide whether to take the lump sum or the annual installments. What is the amount of the lump sum that would be exactly equal to the present value of the annual installments? Round off to the nearest $1.
A) $89,000,000
B) $38,163,612
C) $13,092,576
D) $41,083,128

When comparing annuity due to ordinary annuities, annuity due annuities will have higher

A) present values.
B) annuity payments.
C) future values.
D) both A and C.
E) all of the above.

Gina Dare, who wants to be a millionaire, plans to retire at the end of 40 years. Gina's plan is to invest her money by depositing into an IRA at the end of every year. What is the amount that she needs to deposit annually in order to accumulate $1,000,000? Assume that the account will earn an annual rate of 11.5%. Round off to the nearest $1.
A) $1,497
B) $5,281
C) $75
D) $3,622


As time increases for an amortized loan, the ________ decreases.
A) interest paid per payment
B) principal paid per payment
C) the outstanding loan balance
D) both A and C
Answer:  D

Bull Gator Industries is considering a new assembly line costing $6,000,000. The assembly line will be fully depreciated

Bull Gator Industries is considering a new assembly line costing $6,000,000. The assembly line will be fully depreciated by the simplified s...