2024 – Hello need help with this question can someone answer it for me Many businesses
Finance – 2024
Hello need help with this question can someone answer it for me.
Many businesses use TVM to calculate what they expect in return on capital projects investments. At my firm we used TVM to calculate the cash flows for bonds, which were issued or purchased. When using the TVM you have to consider cash flow consistency as well as the interest rate.
Assume you hit the lottery for $1 million. You now have the option to take the lump-sum of $500,000 or the annuity which will pay you $50,000 per year for the next 20 years. Can we use TVM to determine which option is the best, from a purely financial standpoint? (Hint: what is the interest rate on the annuity
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