Question

Check Laura won $5,000,000 in the state lottery, which she has elected to receive at the end of each month over the next 30 years. She will receive 7% interest on unpaid amounts. To determine the amount of her monthly check, she should use a table for the Multiple Choice ( ) Present value of an annuity due of $1 O Future value of an annuity due of $1. Present value of an ordinary annuity of $1 Future value of an ordinary annuty of 5

Answer 1

Option 'C' is correct

Step-by-step explanation:

Present value of an ordinary annuity of $1

The present value of an annuity is the current value of future payments from an annuity, given a specified rate of return or discount rate.

`\text { Annuity amount }=\$ 5,000,000 / \mathrm{PVAF}(7 \% / 12,360 \text { periods })`

The future estimation of cash is determined by utilizing a rebate rate. The markdown rate alludes to a financing cost or an accepted pace of profit for different speculations. The littlest markdown rate utilized in these figurings is the hazard free pace of return. U.S. Treasury bonds are commonly viewed as the nearest thing to a hazard-free venture, so their arrival is regularly utilized for this reason.