Question

I recently found a real-life advertisement in the newspaper. (Only the phone number has been changed.) Suppose that you have won a $20,000,000 lottery, paid in 20 annual installments. How much would be a fair price to be paid today for the assignment of this prize? Assume the money could be invested at 6%. (Assume the lottery pays out as an ordinary annuity. Round your answer to the nearest cent.) la-7:30p LOAN WANTED: $150,000, se-sold unless ffordable. I cured by approx. $600,000 clearly indic aaroner- equlty In four 555-8310. and telemai pay 147 live pis tain the be Massage Here exc. credit. 555-42.5. When earli 55 in/oy? *** WE PAY CASH *** on mplied. mg es Eve CARE for R.E notes, lotteries, annuities, adprtiseme 555- 372 bus. notes, Inheritances. Please or do no call 800-555-7853. quirement 2 ENTREPRENEURS need Invesnot be respi to establish a juice error, we as 8-3590 * Min. 15% be reportec Interest. 555-4668. may take e $6000 NEEDED for 90 days, 20% CLASSIFIEI Interest. "62-'72 corvettes, Hunter's Massage $12K val. or R.E. for collateral. trade-hire In Call 555-5312 lv. msg. aft 6pm. vice, the DUCI

Answer 1

Annual payment = 20,000,000/20 = 1,000,000

Calculating Present Value,

Using TVM Calculation,

PV = [FV = 0, PMT = 1,000,000, N = 20, I = 0.06]

PV = $11,469,921.22