Question

The $40 million lottery prize that you have just won actually pays out $2.0 million a...

The $40 million lottery prize that you have just won actually pays out $2.0 million a year for 20 years. The interest rate is 8.0%.

a. If the first payment comes after 1 year, what is the present value of your winnings? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

Present Value _____________ Million

b. What is the present value if the first payment comes immediately? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

Present Value _______________ Million

Math   Advanced-Math   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Part(a)

.

when the first payment comes after 1 year

PMT=2Million

r=8%=0.08

n=1 for annual payment

t = 10 years

.

.

.

.

.

Part(b)

.

when the first payment comes immediately

PMT=2Million

r=8%=0.08

n=1 for annual payment

t = 10 years

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The $45.0 million lottery payment that you have just won actually pays $3.0 million per year...
The $45.0 million lottery payment that you have just won actually pays $3.0 million per year for 15 years. The interest rate is 9%. a. If the first payment comes in 1 year, what is the present value of the winnings? (Do not round intermediate calculations. Enter your answer in dollars, not millions, rounded to 2 decimal places.)   Present value $ b. What is the present value if the first payment comes immediately? (Do not round intermediate calculations. Enter your...
The North Carolina Lottery Commission has just informed you that you have won a valuable prize!...
The North Carolina Lottery Commission has just informed you that you have won a valuable prize! The amount is to be paid out at the rate of $70,000 a year for the next 20 years.    With a discount rate of 13 percent, what is the present value of your winnings?  (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Congratulations! You have just won the State Lottery. The lottery prize was advertised as an annuitized...
Congratulations! You have just won the State Lottery. The lottery prize was advertised as an annuitized $105 million paid out in 30 equal annual payments beginning immediately. The annual payment is determined by dividing the advertised prize by the number of payments. You now have up to 60 days to determine whether to take the cash prize or the annuity. a. If you were to choose the annuitized prize, how much would you receive each year? b. The cash prize...
You have just won $10 million in the lottery! However, the actual payment will be made...
You have just won $10 million in the lottery! However, the actual payment will be made in 20 equal annual installments, the first one to be recieved immediately. In present value terms, how much have you really won, assuming that you can earn 8 percent per year on your money? (Show Calculations)
Myrna Loy has just won a lottery. The payout is $51,293 a year for 20 years....
Myrna Loy has just won a lottery. The payout is $51,293 a year for 20 years. Myrna will receive the first payment in one year. If the appropriate discount rate is 6% per year with annual compounding, what is the present value of Myrna’s winnings? Do not round at intermediate steps in your calculation. Round your answer to the nearest dollar. Enter your answer without the $ symbol.
You have just won the Mega Millions Lottery with a jackpot of $54,000,000. Your winnings will...
You have just won the Mega Millions Lottery with a jackpot of $54,000,000. Your winnings will be paid to you in 26 equal annual installments with the first payment made immediately. If you had the money now, you could invest it in an account with a quoted annual interest rate of 12% with monthly compounding of interest. What is the present value of the stream of payments you will receive?
Suppose you have just won the first prize in a lottery. The lottery offers you two...
Suppose you have just won the first prize in a lottery. The lottery offers you two possibilities for receiving your prize. The first possibility is to receive a payment of $16,000 at the end of the year, and then, for the next 10 years this payment will be repeated, but it will grow at a rate of 4%. The interest rate is 12% during the entire period. The second possibility is to receive $100,000 right now. Which of the two...
1. Suppose you have just won the first prize in a lottery. The lottery offers you...
1. Suppose you have just won the first prize in a lottery. The lottery offers you two possibilities for receiving your prize. The first possibility is to receive a payment of $16,000 at the end of the year, and then, for the next 10 years this payment will be repeated, but it will grow at a rate of 4%. The interest rate is 12% during the entire period. The second possibility is to receive $100,000 right now. Which of the...
You have just won the Georgia Lottery with a jackpot of $53,000,000. Your winnings will be...
You have just won the Georgia Lottery with a jackpot of $53,000,000. Your winnings will be paid to you in 26 equal annual installments with the first payment made immediately. If you feel the appropriate annual discount rate is 14%, what is the present value of the stream of payments you will receive?
1.) You just won the $85 million lottery. You will receive $2.6 million a year for...
1.) You just won the $85 million lottery. You will receive $2.6 million a year for the next 30 years plus an additional payment of $7 million at the end of 30 years. The interest rate is 6 percent. How much is your lottery prize worth today? 2.)If you owe $51,000 payable at the end of eight years, what amount should your creditor accept in payment immediately if the interest rate on the loan is 13 percent? 3.) You have...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT