You have just received notification that you have won the $1 million first prize
ID: 2735805 • Letter: Y
Question
You have just received notification that you have won the $1 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you’re around to collect), 62 years from now.
What is the present value of your windfall if the appropriate discount rate is 9 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)
You have just received notification that you have won the $1 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you’re around to collect), 62 years from now.
Explanation / Answer
Present Value = Future value / ( 1+i)^n = 1000000/ ( 1+0.09)^62 = 1000000/209.1428 = 4781.42
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