Question

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.)

Answer 1

Present Value of Annuity =

where r is the rate of Return for compounding period = 13%

n is the no of compounding period = 20 years

periodic Payment = $ 70,000

=

= 70,000 * 7.02475157838

= 491,732.61

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