Question

The Powerball lottery jackpot reached $1.6 billion a few years ago. Assume the jackpot was to be paid in 25 annual installments of $64,000,000 per year (starting in year 1). An alternative to the installment plan was to receive a lump sum payment today. If the applicable discount rate was 4% per year, how large was the lump sum payment option? Round to the nearest cent.

Answer #1

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