270 472 Why This x 0 Grades for 43 ACG2 ACG20710 Cheg

(270 472 ? ? : Why This. x 0 Grades for × ?) 43) ACG2 × ?ACG20710 ? Chegg Stux p Mail nbro XyX Assignme x ? ? *Office Editing for Docs, Sheets & Slides chrome-extension://bpmcpldpdmajfigpchkicefoigmkfalc/views/app. html O UCF 3430 week 12h avia6493 Google Do x , connect Assignment K.1 Excel.xlsx File Edit Insert Format Help Share Calibri 0 1 First Option. What is the present value of $150,000 received today? 4 Second Option. What is the present value of $14,000 received each year for 20 years plus a $60,000 lump-sum at year 20? 6 Run two PV Calcs, then add the present values: 9 Lump Sum Payment 10 Total Present Value: $0.00 12 Combine Them into one PV calculation Total Present Value: $0.00 15 16 17 18 19 Time Value of Money Annuities -vs Lump Sum- Q1 Q2 Q3 Q4 Q5 Q6 Q7 +1 6:55

Solution

ANSWER

1^st Option

PV of $ 1, 50,000 received today

There is some missing information in the Question because present value of $ 1, 50,000 received TODAY will always be $1, 50,000.

Suppose if the question was, find present value of $1, 50,000 received after 10 years then the formulae would have been-

                                                (Amount/ (1+ Discounting Rate) ^10yrs)

                                                                       OR

                                    Amount * PVIF for 10^th year at the discounting rate given

Now, in above example if rate given is 10% then the answer would be:-

$1, 50,000 * PVIF of 10% for 10years (on calculator or excel type (1/1+10%) and then press = for 10times= $1, 50,000 * 0.3855 = $57,825

2^nd Option

PV of $ 14,000 received for 20years each year and $ 60,000 at 20^th year where rate given is 20%

$ 14,000 * PVIFA for 20% (i.e. Cumulative discounting factor for 20years of 20%) + $ 60,000 * PVIF for 20% (Only the discounting factor at the end of 20^th year)

$ 14,000 * 4.8696 + $ 60,000*0.0261= $ 69739.16

Note: - Formulae for this is the same as before

Formulae in Excel- For 10%- (1/1+10%)^10 OR (1/1.1)^10 for 10th year

For 20%- (1/1+20%)^20 for 20th year and cumulative for all 20years

Hope this helps