The Solution to This Problem Requires Time Value of Money

question 107

Multiple Choice

The solution to this problem requires time value of money calculations.Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. Winston wins the lottery.He wins $20,000 per year to be paid to him for 10 years.The state offers him the choice of a cash settlement now instead of the annual payments for 10 years.If the interest rate is 6%, what is the amount the state will offer for a settlement today?

• A) $147,200
• B) $154,440
• C) $175,000
• D) $200,000

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Definitions:

Religious

Pertaining to or connected with religion, including beliefs, practices, and rituals associated with a faith.

Class Backgrounds

The social and economic conditions into which individuals are born, influencing their opportunities, attitudes, and behaviors.

Social Class

A division of society based on social and economic status, influencing an individual’s opportunities, lifestyle, and attitudes.

Profound Effect

A significant or deep impact that greatly influences or changes an individual, society, or situation.