Exercise 6-11 Future and present value.pdf - Answer each of...

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)
$66,000 cash immediately, (2) $22,000 cash immediately and a six-period annuity of $7,800 beginning one
year from today, or (3) a six-period annuity of $13,000 beginning one year from today. ( FV of $1 , PV of $1
FVA of $1
,
PVA of $1
,
FVAD of $1
and
PVAD of $1
) (Use appropriate factor(s) from the tables
provided.)
1-a. Assuming an interest rate of 5%, determine the PV value for the above options.
,
1-b. Which option should Alex choose?
2. The Weimer Corporation wants to accumulate a sum of money to repay certain debts due on December
31, 2025. Weimer will make annual deposits of $120,000 into a special bank account at the end of each
of 10 years beginning December 31, 2016. Assuming that the bank account pays 6% interest