Ask Question
3 December, 00:08

You just won the lottery, which promises you $990,000 per year for the next 20 years. You receive the first payment today (hint: annuity due). If your discount rate is 9.75%, what is the present value of your winnings

+5
Answers (1)
  1. 3 December, 01:45
    0
    The present value of your winnings is $9,410,263.59

    Explanation:

    Present value of annuity due = (1+rate) * Annuity[1 - (1+interest rate) ^-time period]/rate

    =1.0975 x 990,000 [1 - (1.0975) ⁻²⁰]/0.0975

    =990,000 x 9.50531677

    =$9,410,263.59
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “You just won the lottery, which promises you $990,000 per year for the next 20 years. You receive the first payment today (hint: annuity ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers