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How much money is in the Zillion Dollar Lottery today?

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You win the Zillion Dollar Lottery. Starting in 1 Year, you will receive$500,000 annually for 20 years. The states lottery commission has just enough in an account of 15% compounded annually to pay this annuity. How much money is in it today?]

A treasury bill has a maturity value of $10,000 5 years from now. If I receive 5% interest on it, what do I pay for it now?

I wish to by a CD stereo system. I want to collect $800 in 1 year. How much do I deposit monthly in an account that pays 5%compounded monthly?

I take a car loan of $15000. I make monthly payments for 5 years at 6% compounded monthly. What is my monthly payment/

I put $1000 in a account that compound quarterly at 8%. How much do I have after 2 year?

Compare the yields (effective raters) of 10%compounded daily and 10.2% compounded semiannually. Which would you chooses and why?

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Solution Summary

This provides several situations involving interest and compound interest: treasury bills, savings, payments, and yields. It discusses the difference between different compounding terms. This solution is provided in an attached Word document.

Solution provided by:
  • BSc , Wuhan Univ. China
  • MA, Shandong Univ.
Recent Feedback
  • "Your solution, looks excellent. I recognize things from previous chapters. I have seen the standard deviation formula you used to get 5.154. I do understand the Central Limit Theorem needs the sample size (n) to be greater than 30, we have 100. I do understand the sample mean(s) of the population will follow a normal distribution, and that CLT states the sample mean of population is the population (mean), we have 143.74. But when and WHY do we use the standard deviation formula where you got 5.154. WHEN & Why use standard deviation of the sample mean. I don't understand, why don't we simply use the "100" I understand that standard deviation is the square root of variance. I do understand that the variance is the square of the differences of each sample data value minus the mean. But somehow, why not use 100, why use standard deviation of sample mean? Please help explain."
  • "excellent work"
  • "Thank you so much for all of your help!!! I will be posting another assignment. Please let me know (once posted), if the credits I'm offering is enough or you ! Thanks again!"
  • "Thank you"
  • "Thank you very much for your valuable time and assistance!"
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