Please explain proper steps by Step and Do Not Give Solution In Image Format ? And Fast Answering Please ? George has just won the Flyball Lottery. He has two options for receiving his prize. The first option is to accept a $126,000 cashpayment today. The second option is to receive $22,600 at the end of each of the next 19 years and a $30,800 lump sum payment inthe 20th year. George can invest money at a 7% rate.Click here to view the factor table.(a) Calculate the present value of the two options. (For calculation purposes, use 4 decimal places as displayed in the factor table providedand round final answer to O decimal place, e.g. 58,971.)Present value $Option 2Which option should George choose to receive his winnings?Present valueOption 1$Option 2126000(b) If George could invest money at 10%, calculate the present value of the two options. (For calculation purposes, use 4 decimal places asdisplayed in the factor table provided and round final answer to O decimal place, e.g. 58,971.)Which option should he choose?Option 1$126000Option 2241552.32Option 2196993.28

Present value is the value today of a future amount of money, discounted at an appropriate rate of…

Answered: George has just won the Flyball…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Anthony has just won the Flyball Lottery. He has two options for receiving his prize. The first option is to accept a $133,000 cash payment today. The second option is to receive $20,000 at the end of each of the next 19 years and a $33,500 lump sum payment in the 20th year. Anthony can invest money at a 11% rate. Click here to view the factor table. (a) Calculate the present value of the two options. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971.) Option 1 Option 2 Present value $ $ Which option should Anthony choose to receive his winnings? Option 2 Option 1 (b) If Anthony could invest money at 14%, calculate the present value of the two options. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971.) Option 1 Option 2 Present value $ $ Which option should he choose?
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George has just won the Flyball Lottery. He has two options for rec payment today. The second option is to receive $22,600 at the end. the 20th year. George can invest money at a 7% rate. Click here to view the factor table.