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2 pages/≈550 words
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APA
Subject:
Management
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Coursework
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English (U.S.)
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Assignment for Financial management Management Coursework

Coursework Instructions:

Fin 534: Financial Management Assignment for the Strayer University
Homework Set #2: Chapters 4 & 5
Due Week 4 and worth 100 points
Directions: Answer the following questions on 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.
A. 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?
B. In your own words and using various bond websites, please locate one of each of the following bond ratings: AAA, BBB, CCC, and D. Please describe the differences between the bond ratings. Identify the strengths and weaknesses of each rating.

Coursework Sample Content Preview:

Financial Management
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Part 1
The winning amount of lottery is $11,000,000. If we pay it in 26 equal installments on an annual basis, then one installment will equal to 11,000,000/26 = $423,076.92. An ideal option is to start giving the installments as soon as possible.
The interest rate is 9 percent, and the effective annual interest rate will be ((1+r)12 - 1). Here r means 9 percent, which is compounded 12 times because there are a total of twelve months in a year.
The effective annual interest rate will be equal to ((1+0.09)12 ​- 1) = 0.0938. This can also be written as 9.38%, which is the annual discount rate.
The current value of installments = ​Installment0 ​+ Installment1/(1+r)1​ + Installment2/(1+r)2 + ................. + Installment24/(1+r)24 + Installment25/(1+r)25
Here Installmentn ​means the installment at a given time (n). In order to ease the whole process, we included the last year as the installment is supposed to start immediately.
The present or current value of installments is 423076.92 + 423076.92/(1 + 0.0938)1 ​+ 423076.92/(1 + 0.0938)2 + .................................. + 423076.92/(1 + 0.0938)24 +423076.92/(1 + 0.0938)25
Answer =​ $4,453,793.24
Part 2
AAA bond ratings can be regarded as the safest bond ratings; they have lesser number of defaults than any other set of bonds (J, 2015). Here the word “default” means that an investor does not get the amount they are promised about. AAA bonds belong to the investment grade ...
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