274120,2 the bonds for only $20,823,692 rather than for the face amount of c. Wh

Question

274120,2 the bonds for only $20,823,692 rather than for the face amount of c. Why was the company able to issue $21,600,000? The market rate of interest is ecucr han the contract rate of interest. 5. EX.14-19.ALGO (Algorithmic) Present Value of an Annuity On January 1, you win $2,600,000 in the state lottery. The $2,600,000 prize will be paid in equal instaliments of $260,000 over 10 years. The payments will be made on December 31 of each year, beginning on December 31 of the nment.do?assignmentld 716816 36 http/

Explanation / Answer

CALCULATION OF THE PRESENT VALUE OF THE LOTTER PRIZE Years Deposit PVF @ 6% Present Value 1 $2,60,000                         0.9434 $2,45,283 2 $2,60,000                         0.8900 $2,31,399 3 $2,60,000                         0.8396 $2,18,301 4 $2,60,000                         0.7921 $2,05,944 5 $2,60,000                         0.7473 $1,94,287 6 $2,60,000                         0.7050 $1,83,290 7 $2,60,000                         0.6651 $1,72,915 8 $2,60,000                         0.6274 $1,63,127 9 $2,60,000                         0.5919 $1,53,894 10 $2,60,000                         0.5584 $1,45,183 Total $19,13,623 Answer = Present Value of prize = $19,13,623

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