4. The Lucky Leprechaun Casino awards $5,000,000. It will be paid over the next 50 years...
4. The Lucky Leprechaun Casino awards $5,000,000. It will be paid over the next 50 years at the rate of $100,000 per year with the first payment today. With a discount rate of 11 percent, what is the present value of this prize?
Homework Answers
| PVAnnuity Due = c*((1-(1+ i)^(-n))/i)*(1 + i ) |
| C = Cash flow per period |
| i = interest rate |
| n = number of payments |
| PV= 100000*((1-(1+ 11/100)^-50)/(11/100))*(1+11/100) |
| PV = 1003623.5 |
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