Question

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?

Answer #1

You have just won the Georgia Lottery with a jackpot of
$26,000,000. 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 8% with monthly compounding of interest.
What is the present value of the stream of payments you will
receive?

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
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annual interest rate of 12% with monthly compounding of interest.
What is the present value of the stream of payments you will
receive?

What if you have just won the Strayer Lottery jackpot of
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beginning immediately. If you had the money now, you could invest
it in an account with a quoted annual interest rate of 9% with
monthly compounding of interest. What is the present value of the
payments you will receive?
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You have just won $10 million in the lottery! However, the
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Calculations)

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interest rate would you be indifferent between the cash and
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a. Ordinary Annuity
b. Ordinary Perpetuity
c. Compounding Annuity
d. Annuity Due
e. None of these describes how the series of payments should be
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Required:
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