You just won the lottery. Congratulations! The jackpot is $60,000,000, paid in eight annual payments. The first payment on the lottery jackpot will be made today. In PV terms you really won ______________assuming the annual interest rate is 8 percent?

You just won the lottery. Congratulations! The jackpot is $60,000,000, paid in eight annual payments. The first payment on the lottery jackpot will be made today. In PV terms you really won ______________assuming the annual interest rate is 8 percent?

 

 

answer:

Period Amount $60,000,000/8 PV Factor 8% Value Today (Amount / factor) $
0                            7,500,000 1.000                                                            7,500,000
1                            7,500,000 1.080                                                            6,944,444
2                            7,500,000 1.166                                                            6,430,041
3                            7,500,000 1.260                                                            5,953,742
4                            7,500,000 1.360                                                            5,512,724
5                            7,500,000 1.469                                                            5,104,374
6                            7,500,000 1.587                                                            4,726,272
7                            7,500,000 1.714                                                            4,376,178
Total                                                          46,547,775

PV terms you really won $46,547,775.

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