Calculate the present value of the payments you will receive


Problem: Bond ratings

Answer these questions in 1 to 2 pages paper.

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.

• Calculate the present value of the payments you will receive. Show your calculations using formulas in your paper or in an attached spreadsheet file.

• Explain why there is a difference between the present value of the Strayer lottery jackpot and the future value of the 26 annual payments based on your calculations and the information provided.

• Compare the information about risk and return indicated by different bond ratings. Support your answer with references to research.

• Use various bond websites to locate one of each of the following bond ratings: AAA, BBB, CCC, and D. Research the differences between the bond ratings, the required interest rates, and the risk. List the websites used as sources for this research.

• Identify the strengths and weaknesses of each rating.

The response must include a reference list. Using Times New Roman 12 pnt font, double-space, one-inch margins, and APA style of writing and citations.

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Financial Management: Calculate the present value of the payments you will receive
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