Question

7.) You win a lottery prize that has a total value (after taxes) of $35,850,000. 30...

7.) You win a lottery prize that has a total value (after taxes) of $35,850,000. 30 yearly payments of

$1,195,000 would be made if you took the winnings over the 30 year payout with the first

payment being made immediately and the remaining equal payments being made yearly at the

beginning of each year. The lottery would buy an annuity which has an annual interest rate of

5.2%. You elect the alternative and take the cash value of this annuity now. You calculate that

   you can make more money by investing the winnings at a higher rate than 5.2%. What is the

   cash value of this annuity?

Homework Answers

Answer #1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.

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