Question

You have just won the Georgia Lottery with a jackpot of $37,000,000. 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 11%, what is the present value of the stream of payments you will receive?

Answer 1

Present value = (1 + r) * Annuity * [1 - 1 / ( 1 + r)ⁿ] / r

37,000,000 = (1 + 0.11) * Annuity * [1 - 1 / ( 1 + 0.11)²⁶] / 0.11

37,000,000 = 1.11 * Annuity * 8.488058

37,000,000 = Annuity * 9.421745

Annuity = $3,927,085.83

I believe the question is what is the annual stream of payments. Annual stream of payments i.e 26 payments are $3,927,085.83.

the present value of stream of payments is $37,000,000