Question

3. You have just been notified that you have won the $2 million lottery! The prize will be awarded on your 100" birthday which is 80 years from now. If the current discount rate is 5%, what is the present value of your windfall? Show your work.

Answer 1

3. You won $2 million, which will be given 80 years Later. Discount vate is 5%. from this, no. of years (n) = 80 years future Value = $ 2 million = 2,000,000 Rate Cal = 5% = 0.05 We know the four mula gou Puerent Value of a amount, puresent Value = future Value * -in, : Pucent Value = $2,000,000 R 70.057 80 = $38,432. 3348 - $ 38,432 A

d. Sixtu Coime of Value $1 in 1952, indicates pureseest value in 1952, the value of these coins in 2018 indicate future value from this; Puerent Value = $ 60 ($1x 60 caine) Co) Ducourt Rate = 10% Cpeur annum) No. of year = 66 ( 2018 - 1992) Powmula for future Value , - Present Value x (1 + a)" - $60 (1+0.19% - $ 32,364.468 -$ 32,364.