Francis Peabody just won the $89,000,000 California State Lottery. The lottery o

Question

Francis Peabody just won the $89,000,000 California State Lottery. The lottery offers the winner a choice of receiving the winnings in a lump sum or in 26 equal annual installments to be made at the beginning of each year. Assume that funds would be invested at 7.65%. Francis is trying to decide whether to take the lump sum or the annual installments. What is the amount of the lump sum that would be exactly equal to the present value of the annual installments? Round off to the nearest $1. Answer $89,000,000 $38,163,612 $13,092,576 $41,083,128 Francis Peabody just won the $89,000,000 California State Lottery. The lottery offers the winner a choice of receiving the winnings in a lump sum or in 26 equal annual installments to be made at the beginning of each year. Assume that funds would be invested at 7.65%. Francis is trying to decide whether to take the lump sum or the annual installments. What is the amount of the lump sum that would be exactly equal to the present value of the annual installments? Round off to the nearest $1. Answer $89,000,000 $38,163,612 $13,092,576 $41,083,128 Francis Peabody just won the $89,000,000 California State Lottery. The lottery offers the winner a choice of receiving the winnings in a lump sum or in 26 equal annual installments to be made at the beginning of each year. Assume that funds would be invested at 7.65%. Francis is trying to decide whether to take the lump sum or the annual installments. What is the amount of the lump sum that would be exactly equal to the present value of the annual installments? Round off to the nearest $1. $89,000,000 $38,163,612 $13,092,576 $41,083,128 $89,000,000 $38,163,612 $13,092,576 $41,083,128

Explanation / Answer

On Financial Calculator N=26 i=7.65 FV=0 PMT= (89,000,000/26) =3423076.92 cmpt pv = 41083128 D) $41,083,128
Source: Test Bank

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.