Finance homework Assingnment Accounting, Finance, SPSS Essay
Directions: Answer the following questions in a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link above.
You have just won the Strayer Lottery jackpot of $11,000,000. You will be paid in 26 equal annual installments beginning immediately. If you had the money now, you could invest it in an account with a quoted annual interest rate of 9% with monthly compounding of interest. What is the present value of the payments you will receive?
In your own words and using various bond websites, locate one of each of the following bond ratings: AAA, BBB, CCC, and D. Describe the differences between the bond ratings. Identify the strengths and weaknesses of each rating.
Grading for this assignment will be based on answer quality, logic/organization of the paper, and language and writing skills. List any reference used.
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You have just won the Strayer Lottery jackpot of $11,000,000. You will be paid in 26 equal Annual Installments beginning immediately. If you had the money now, you could invest it in an account with a quoted Annual Interest Rate of 9% with monthly compounding of interest. What is the present value of the payments you will receive?
This is the present value of the annuity as there is periodic payment of money at regular intervals
Monthly Rate
=9%/ 12=0.075=7.5%
The Effective Percentage Rate (EFF)
= (1+0.075) ^ 12 - 1= (1.075) ^12 -1= 9.3807%
The PMT is ($11,000,000/ 26 years) = $423,076.92
The present value of the all 26 payments is given as
$423,076.92+ $423,076.92*[1-1.093807-25]/ 9.3807%= $ 4,453,793.24
In your own words and using various bond websites, locate one of each of the following bond ratings: AAA, BBB, CCC, and D. Describe the differences between the bond ratings. Identify the strengths and weaknesses of each rating.
The AAA bond rating shows that the bond has the highest credit quality that the investors can choose. In the foreseeable future, AAA rated bonds are best placed to pay their bonds. Based on S&P and Fitch scale, AAA is the highest rated bond a...
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