You have just won the lottery. The prize is $1.2 million, payable is 20 equal annual...
You have just won the lottery. The prize is $1.2 million, payable is 20 equal annual installments. You received the first installment of $60,000 today, you are so happy to be a millionaire. However, your friend claims you really aren't a millionaire. What is the present worth of your winnings, assuming your MARR is 8%?
Homework Answers
Present value of annuity due=(1+rate)*Annuity[1-(1+interest rate)^-time period]/rate
=1.08*60,000[1-(1.08)^-20]/0.08
=60,000*10.6035992
=$636215.95(Approx). (or $0.64 million)(Approx).
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