On his way home from work, Bill Harris was listening to the radio, which reminded him of the large Lotto Jackpot that night. So, Bill bought a ticket and won the jackpot of $50 million. Bill will be paid in 20 annual installments of $2.5 million. If Bill had selected the “cash value option”, and the prevailing interest rate was 6%, his lump-sum payment would be: (Hint, present value of $2.5 million over 20 periods, using a 6% rate)
A. |
$28.7 million |
|
B. |
Not enough information provided |
|
C. |
No answers are correct. |
|
D. |
$15.6 million |
|
E. |
$19.1 million |
please rate positively .. let me know if you need any clarification..
we have to use financial calculator to solve this problem | |||
Put in calculator = | |||
N | 20 | ||
FV | 0 | ||
PMT | 2.5 | ||
I | 6% | ||
Compute PV | (28.7) | ||
therefore correct answer is option : A $28.7 Million |
On his way home from work, Bill Harris was listening to the radio, which reminded him...
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