You and 11 coworkers just won $10 million ($833,333.33each) from the state lotte

Question

You and 11 coworkers just won $10 million ($833,333.33each) from the state lottery. Assuming you each receive your share over 20 years and that the state lottery earns a 4 percent return on its funds, what is the present value of your prize before taxes if you request the 'up-front cash'option? (Note:Also assume an ordinary annuitylong dash payments made at the end of each period.)

Q1- The present value of your prize before taxes if you request the 'up-front cash' option is ? (Round your answer to the nearest dollar.)

Explanation / Answer

The annual payment of the prize for a person = 833333.33/20 = 41666.66

So, the present value of the prize =

= 41666.66 + 41666.66/1.04 + 41666.66/1.04^2 + +++++++ + 41666.66/1.04^19

= 566263.51

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

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