Award: 10 out of 10.00 points
Answer each of the following independent questions.
Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1)
$78,000 cash immediately, (2) $28,000 cash immediately and a six-period annuity of $8,600 beginning
one year from today, or (3) a six-period annuity of $15,200 beginning one year from today.
Assuming an interest rate of 5%, determine the Present value for the above options. (Use
PVA of $1
(Round "PV Factors" to 5 decimal places and final answers to the nearest dollar amount.)
Which option should Alex choose?
The Weimer Corporation wants to accumulate a sum of money to repay certain debts due on December
31, 2022. Weimer will make annual deposits of $150,000 into a special bank account at the end of each
of 10 years beginning December 31, 2013. Assuming that the bank account pays 6% interest
compounded annually, what will be the fund balance after the last payment is made on December 31,
FVA of $1
(Round "FV Factor" to 4 decimal places and final answer to the nearest
Fund balance, December 31, 2022
Learning Objective: 06-06
Compute the future value of
both an ordinary annuity and
an annuity due.