Purchase Solution

Determining the present value of an investment at a set rate

Not what you're looking for?

Ask Custom Question

In May 1992, a 60 yr old nurse gambled $12 in a Reno casino and walked away with the biggest jackpot in history - $9.3 million. In reality, the jackpot wasn't really worth $9.3 million. The sum was to be paid in 20 annual installments of $465,000 each. What is the present value of the jackpot?

Purchase this Solution
Solution Summary

This solution is comprised of a simple explanation of how to determine the present value of an investment at a set interest rate.

Solution Preview

The present value of these payments is simply the sum of the present values of each payment. But rather than valuing each payment separately, it is much easier to treat the cash ...

Purchase this Solution
Free BrainMass Quizzes
IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

View More Free Quizzes
Related BrainMass Solutions

  • Time Value of Money Concepts

    B. the present value of $1. C. the future value of $1. D. the future value of an annuity. 1.) The IF for the future value of an annuity is 4.5 at 10% for 4 years.

  • Question about Finance problems: IRR and NPV.

    The problem set deals with determining the net present value and internal rate of return for a set of cashflows.

  • Alternative Investment Decisions

    Benefits may be in the form of future free cash flows which are discounted to the present, using a certain discount rate to make it equivalent to the initial outlay which is already expressed in its present value.

  • Managerial accounting

    d- proceeds from the sale of an asset that is replaced. 2-A company has unlimited funds to invest at its discount rate.

  • Net Present Value

    Another factor that will be assumed is the discount rate that will be used in computing the present value of the future cash flows. The discount rate may be the cost of capital or a cut-off rate (ROI) set by the management.

  • Determining the future value of an investment at a set rate

    3837 Determining the future value of an investment at a set interest rate. Suppose that Peter invested $24 at a 5% interest rate. What would be the balance in his account after 5 years? 50 years?

  • NPV of a proposed investment proposal

    Chee Company has gathered the following data on a proposed investment project: Investment required in equipment $250,000 Annual cash inflows $60,000 Salvage value $0 Life of the investment 6 years Required rate of return 6% The net present

  • Finance: Capital budgeting explained

    The solution is presented in a Word and Excel document. The problem set deals with determining whether a venture is profitable by assessing the net present value and profitability of the venture.

  • Determining the net present value

    (Please round computations to the nearest whole penny). a. Calculate the net present value of the investment opportunity. b. Indicate whether the investment opportunity is expected to earn a return above or below the desired rate of return.

View More Related Solutions