You just won the lottery. Congratulations! The jackpot is $35,000,000, paid in four equal annual payments....
You just won the lottery. Congratulations! The jackpot is $35,000,000, paid in four equal annual payments. The first payment on the lottery jackpot will be made today. In present value terms, you really won _________- assuming an annual interest of 6.50%.
Homework Answers
rate positively..
| Computation of present value | ||||
| year | Cash flow | PVIF @ 6.5% | Present value | |
| 0 | 8,750,000 | 1.0000 | 8,750,000 | |
| 1 | 8,750,000 | 0.9390 | 8,215,962 | |
| 2 | 8,750,000 | 0.8817 | 7,714,519 | |
| 3 | 8,750,000 | 0.8278 | 7,243,680 | |
| 31,924,161 | ||||
| Ans = | 31,924,161 |
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