The Solution to This Problem Requires Time Value of Money

question 13

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.
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Winston wins the lottery.He wins $20,000 per year to be paid to him for ten years.The state offers him the choice of a cash settlement now instead of the annual payments for ten 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:

Silly

Exhibiting a lack of wisdom or judgment; foolish or nonsensical behavior often aimed at provoking laughter.

Skating

The action or activity of gliding on skates, which may refer to ice skates, roller skates, or skateboards.

Negative Attitudes

Predispositions or tendencies to evaluate an individual, group, or issue in an adverse or unfavorable manner.

Prejudice

Unfavorable attitude toward members of certain groups outside one’s own, especially racial or ethnic groups.