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Congratulations! You won the lottery. You will receive $1,000,000 a year for 10 years. You decide...

Congratulations! You won the lottery. You will receive $1,000,000 a year for 10 years. You decide to take $500,000 of each payment and place it in an account which earns 5%. How much will this account be worth in 20 years?

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Answer #1

     

_______________________________

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Future Value Annuity after 10 years=

r = 0.05

n = 10 years

=

= 6288946.2675

Future Value after 20 years = 6288946.2675 * (1+0.05)^10

= 10,244,030.78

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