# Answer each of the following independent questions

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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)\$92,000 cash immediately, (2) \$36,000 cash immediately and a six-period annuity of \$9,500 beginningone year from today, or (3) a six-period annuity of \$18,600 beginning one year from today. (FV of \$1,PVof \$1,FVA of \$1,PVA of \$1,FVAD of \$1andPVAD of \$1)(Use appropriate factor(s) from the tablesprovided.)1.Assuming an interest rate of 6%, determine the present value for the above options. Which optionshould Alex choose?2.The Weimer Corporation wants to accumulate a sum of money to repay certain debts due onDecember 31, 2027. Weimer will make annual deposits of \$185,000 into a special bank account at theend of each of 10 years beginning December 31, 2018. Assuming that the bank account pays 7% interest
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Chapter 10 / Exercise 10-9
Financial Accounting: The Impact on Decision Makers
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compounded annually, what will be the fund balance after the last payment is made on December 31,2027?Assuming an interest rate of 6%, determine the present value for the above options. Which optionshould Alex choose?(Round your final answers to nearest whole dollar amount.)
Which option should Alexchoose?
The Weimer Corporation wants to accumulate a sum of money to repay certain debts due on December31, 2027. Weimer will make annual deposits of \$185,000 into a special bank account at the end of eachof 10 years beginning December 31, 2018. Assuming that the bank account pays 7% interestcompounded annually, what will be the fund balance after the last payment is made on December 31,2027?(Round your final answers to nearest whole dollar amount.)
Alex should choose option (1).2.FVA = \$185,000 (13.8164*) = \$2,556,040*Future value of an ordinary annuity of \$1:n= 10,i= 7% (from FVA of \$1)From <-group/kEZASsBkEPufvC6h1BhqikWbjv4n3t8DUJRH5CxJN9aAYDxkfwH1zhtc1MmoaluOfdAAyXW65XTkf2ngUh82e0azvnsveuF0T4W3PdSTyaga99ja7waPsA>

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Term
Fall
Professor
Richardson,C.
Tags
Payment, Alex Meir
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The document you are viewing contains questions related to this textbook.
The document you are viewing contains questions related to this textbook.
Chapter 10 / Exercise 10-9
Financial Accounting: The Impact on Decision Makers
Norton/Porter
Expert Verified