Edward Hughes Has Just Won the State Lottery and Has

question 40

Multiple Choice

Edward Hughes has just won the state lottery and has the following three payout options for after-tax prize money:
1.$166,000 per year at the end of each of the next six years
2.$306,000 (lump sum) now
3.$518,000 (lump sum) six years from now
The annual discount rate is 9%.Compute the present value of the second option.(Round to nearest whole dollar.)
Present value of $1:
$$\begin{array} { | c | c | c | c | } \hline & 8 \% & 9 \% & 10 \% \\\hline 1 & 0.926 & 0.917 & 0.909 \\\hline 2 & 0.857 & 0.842 & 0.826 \\\hline 3 & 0.794 & 0.772 & 0.751 \\\hline 4 & 0.735 & 0.708 & 0.683 \\\hline 5 & 0.681 & 0.650 & 0.621 \\\hline 6 & 0.630 & 0.596 & 0.564 \\\hline 7 & 0.583 & 0.547 & 0.513 \\\hline\end{array}$$

• A)$684,000
• B)$103,600
• C)$414,400
• D)$306,000

Identify and describe different sources of water pollution.

Understand the impacts of nutrient pollution on aquatic ecosystems.

Explain the process and importance of sewage treatment.

Recognize the differences between point source and nonpoint source pollution.

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Definitions:

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in an equal amount per period.

Income Tax Expense

The cost incurred by a business or individual due to income tax, reflected as an expense on the income statement.

Capital Budgeting

The process by which a business evaluates and plans for significant investments in projects or long-term assets.

Straight-Line Depreciation

A technique of spreading the expense of an asset evenly across its lifespan to calculate depreciation.