A state\'s lottery winner is promised $200,000 a year for 20 years (starting at

Question

A state's lottery winner is promised $200,000 a year for 20 years (starting at the END of the First year).

How much must the state invest NOW to guarantee the prize if the state can earn annually 7% on its funds?

Please also including the Details of your work by stating what's the amount of the PV, FV, i, N, PMT respectively. And please use the Financial Calculator to get the results. Thank you!

PS. FYI, This question is relates to the book "Investments: An Introduction, 10th Edition",by Herbert B. Mayo. ISBN: 0538452099.

Explanation / Answer

PV= 200000PVIFA(7%,20)=$2118802.849

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