Question

Rita Gonzales won the $62 million lottery. She is to receive $2.8 million a year for the next 20 years plus an additional lump sum payment of $6 million after 20 years. The discount rate is 14 percent. 

What is the current value of her winnings? Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) 

Present value = _______ 

Answer 1

Hello Sir/ Mam

YOUR REQUIRED ANSWER IS PV = $18,981,335.88

Given that:

n = 20 years

PMT = $2.8mn

FV = $6mn

Rate = 14%

Using excel function, "=PV(14%,20,-2800000,-6000000,0)", we get PV = $18,981,335.88

I hope this solves your doubt.

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