# Financial Accounting Assignment Solved Solution Sample

QUESTIONB

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.

1. 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?

Total Payment : 11,000,000

No. of periods : 26

Annual Installments : 11,000,000/26 = 423076.9

Annual interest rate = 9%

Effective interest rate since compounded monthly =( (1+9%/12)^12-1) =9.3807%

Present value = P*((1-(1+r)^-n)/r)

Where p is annual instalment

R is effective interest rate

n is no. of installments

=423076.9*(1-(1+9.3807%)^-26)/9.3807%)

=4071828

1. 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.
 Company Strengths Weakness AAA Johnson And Johnson, Microsoft Excellent Financial Conditions, Solid Strategy and Vision for Future No Weakness BBB Mattle Inc. Moderate Level Financials Lowest Hung investment grade Bond, Investors must be cautious while Investing CCC Anglo American PLC Sustainable for Short Period Poor Financials, Junk Grade Investments D Martin Marietta Materials No Strengths Not advisable for investments, Risky and Manipulative financials

References

https://www.thebalance.com/u-s-companies-rated-aaa-higher-than-u-s-government-bonds-417105

https://ratingagency.morningstar.com/