Present value of annuity payments) The state lottery's million-dollar payout provides for $1.1 million to be paid in 20 installments of $55000 per payment. The first $55000 payment is made immediately, and the 19 remaining $55000 payments occur at the end of each of the next 19 years. If 12 percent is the discount rate, what is the present value of this stream of cash flows? If 24 percent is the discount rate, what is the present value of the cash flows? a. If 12 percent is the discount rate, the present value of the annuity due is $ nothing. (Round to the nearest cent.)
PVAnnuity Due = c*((1-(1+ i)^(-n))/i)*(1 + i ) |
C = Cash flow per period |
i = interest rate |
n = number of payments |
PV= 55000*((1-(1+ 12/100)^-20)/(12/100))*(1+12/100) |
PV = 460117.73 |
PVAnnuity Due = c*((1-(1+ i)^(-n))/i)*(1 + i ) |
C = Cash flow per period |
i = interest rate |
n = number of payments |
PV= 55000*((1-(1+ 24/100)^-20)/(24/100))*(1+24/100) |
PV = 280319.51 |
Present value of annuity payments) The state lottery's million-dollar payout provides for $1.1 million to be...
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