The caldwell herald newspaper reported the following story: frank ormsby of caldwell is the state’s newest millionaire. by choosing the six winning numbers on last week’s state lottery, mr. ormsby has won the week’s grand prize totaling $1.5 million. the state lottery commission has indicated that mr. ormsby will receive his prize in 20 annual installments of $75,000 each. use excel or a financial calculator to solve. round answers to the nearest dollar. required: 1. if mr. ormsby can invest money at a 10% rate of return, what is the present value of his winnings?

The present value of Frank Ormsby's lottery winnings: $638,517

Explanation:

Please find the below for detailed calculations and explanations:

The present value of Frank Ormsby's winnings is the net present value of the annuity, in which equal annual payment of $75,000 will be paid in the next 20 years and the discount rate is the rate of return at 10%.

Thus, we apply the present value formula for determining present value of the annuity to calculate the present value of his winnings as followed:

PV = (C/i) x [ 1 - (1+i)^(-n)] = (75,000/0.1) x [1 - 1.1^(-20)] = $638,517

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a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.