You win a scratch off lottery ticket that promises to pay an initial payment of 10,000 this year and grow at a rate of 5% forever. If the discount rate is 8%, what is the present value of this investment?
- $350,000.00
- $400,000.00
- $300,000.00
- $500,000.00
- None of the above
Suppose that you buy a car which requires that you make the first payment on the day that you buy it in order to drive it off the lot. The payments are $505 per month. What was the sticker price of the car if the monthly interest rate is 1.5% (periodic rate) and it takes 4 years (48 months) to pay off the car?
- $17,449.36
- $17,191.49
- $35,130.44
- $35,657.39
- None of the above