Question

Uh the interest-coverage ratio. MBA degree has suggested that you calculate Ments each period instead of interest expense each period. Uiscuss this proposal. What do you say? Uiscuss this 9-33 Lottery Winnings The New York Lottery n win the lottery. Partic; or 26 annual payme ew York Lottery provides prizes that start at $3 million and rise each time someone fails to he lottery. Participants in the lottery are permitted to choose to receive a lump-sum payment annual payments as an annuity. A recent winner of $20 million was surprised to receive a check for less than $10 million. How could you explain this to the winner? Exercises 9-34 Accrued Employee Comno Choic

Answer 1

Answer - Geven that Lottery Porize strondt at = $ 3 million Annual payments as an annuity 26. d srecent winnen kad million receive check fess than $ 90 million. Now, &t can be explained to winner by using the present value concept. now take . Example of the discount rate is 15% then present value of feature cash flow will be divided by 44 15.4%. that means the present value will decide the to days cash. Hoto al in future by dividing the amocent of cash flow by a discount rate

so, As in gren Example the persent ② value of fauteure cash flow will decreases than the cash flow, so, the winnest will receives the amount less than $10 million. because he receives the payment today and procent value of the peuge is less than $10 million. In this way we can explain. to the winner by using porecent value concept.