Present and future value tables of $1 at 3% are presented below:N FV $1 PV $1 FVA $1 PVA $1 FVAD $1 PVAD $11 1.03000 0.97087 1.0000 0.97087 1.0300 1.00000 2 1.06090 0.94260 2.0300 1.91347 2.0909 1.97087 3 1.09273 0.91514 3.0909 2.82861 3.1836 2.91347 4 1.12551 0.88849 4.1836 3.71710 4.3091 3.82861 5 1.15927 0.86261 5.3091 4.57971 5.4684 4.71710 6 1.19405 0.83748 6.4684 5.41719 6.6625 5.57971 7 1.22987 0.81309 7.6625 6.23028 7.8923 6.41719 8 1.26677 0.78941 8.8923 7.01969 9.1591 7.23028 9 1.30477 0.76642 10.1591 7.78611 10.4639 8.01969 10 1.34392 0.74409 11.4639 8.53020 11.8078 8.78611 11 1.38423 0.72242 12.8078 9.25262 13.1920 9.53020 12 1.42576 0.70138 14.1920 9.95400 14.6178 10.25262 13 1.46853 0.68095 15.6178 10.63496 16.0863 10.95400 14 1.51259 0.66112 17.0863 11.29607 17.5989 11.63496 15 1.55797 0.64186 18.5989 11.93794 19.1569 12.29607 16 1.60471 0.62317 20.1569 12.56110 20.7616 12.93794 Jose wants to cash in his winning lottery ticket. He can either receive twelve, $8,000 annual payments starting today, or he can receive a lump-sum payment now based on a 3% annual interest rate. What would be the lump-sum payment?A. $82,021.B. $77,911.C. $80,300.D. $79,632.

Question

contestada

Respuesta :

ewomazinoade ewomazinoade · Answer 1 · 2020-12-27T01:39:31+01:00

Answer:

A

Explanation:

The lumpsum he would receive can be determined by calculating the present value of the series of cash flows Jose would receive in the first option

Present value can be calculated using a financial calculator

Cash flow each year from year 0 to 11 = $8000

I = 3%

Present value = $82,021

To find the PV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute