1. A lottery claims its grand prize is $20 million, payable over 5 years at $4,000,000 per year. If the first payment is made immediately, what is the grand prize really worth? Use an interest rate of 7%. The real value of the grand prize is.
2. The projected capital budget of Kandell Corporation is $750,000, its target capital structure is 60% debt and 40% equity, and its forecasted net income is $750,000. If the company follows a residual dividend policy, what total dividends, if any, will it pay out?
a. $450,081
b. $450,000
c. $449,919
d. $449,756
e. $449,838