Question

The gaming commission is introducing a new lottery game called Infinite Progresso. The winner of the Infinite Progresso jackpot will receive $1,000 at the end of January, $2,000 at the end of February, $3,000 at the end of March, and so on up to $12,000 at the end of December. At the beginning of the next year, the sequence repeats starting at $1,000 in January and ending at $12,000 in December. This annual sequence of payments repeats indefinitely. If the gaming commission expects to sell a minimum of 1 million tickets, what is the minimum price they can charge for the tickets to break even, assuming the commission earns 6% per year per month on its investments and there is exactly one winning ticket.

Please show cash flow diagram and please don't use excel functions.

Thank you.

Answer 1