Share
Explore BrainMass

# Net Present Value & Rate of Return for a winning Powerball lottery ticket

Please see attached file for further detail.

Question 2 - Net Present Value

You have just paid \$20 million in the secondary market for the winning Powerball lottery ticket. The prize is \$2 million at the end of each year for the next 25 years. If your required rate of return is 8 percent, what is the net present value (NPV) of the deal?

Internal Rate of Return

What is the internal rate of return (IRR) of the Powerball deal in question 2?

Modified Internal Rate of Return

What is the modified internal rate of return (MIRR) of the Powerball deal in question 2?

Expected Rate of Return of Corporate Bond

Assume that Intel Corporations \$1,000 face value 9 percent coupon rate bond matures in 10 years and sells for \$1,100. If you purchase the bond for \$1,100 and hold it to maturity, what will be your average annual rate of return on the investment?

#### Solution Summary

The net present value and rate of return for a winning powerball lottery ticket is determined. The internal rate of return is determined.

\$2.19