Question

Shelley wants to cash in her winning lottery ticket. She can either receive sixteen $100,000 semiannual...

Shelley wants to cash in her winning lottery ticket. She can either receive sixteen $100,000 semiannual payments starting today, or she can receive a single-amount payment today based on a 6% annual interest rate. What is the single-amount payment she can receive today?

Multiple Choice

  • $801,969.

  • $853,020.

  • $744,090.

  • $1,293,794.

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Answer #1

Ans:

Correct Answer is $1,293,794. Please find attached sheet for calculation. Use formula in excel.

For any query please ask in comment box. Please don't forget to provide your valuable feedback. Thanks!

Payments received per month 100000
Tenure Semi annually 16
Interest 6%/2 =6%/2
Single amount of payment today =-PV(C3,C2,C1,,1)
Payments received per month $1,00,000
Tenure Semi annually 16
Interest 6%/2 3%
Single amount of payment today $12,93,794
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