Joseph has won a lottery prize. He will receive a payment of $ 1 2 0 ,

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Joseph has won a lottery prize. He will receive a payment of $ $120, 000$ today. He will also receive payments at the end of each of the next $10$ years. These payments will grow by $3 %$ per year, i $.$ It is $.$ the payment one year from today will be $3 %$ more than the payment today, the payment two years from today will be $3 %$ more than the payment one year from today, etc. What is the total present value of the prize that Joseph has won, given a discount rate of $7.7 %$ per year.

Posted Date: May 06, 2024 02:11 AM

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Joseph has won a lottery prize. He will receive a payment of $ 1 2 0 ,

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Expert Answer:

We can calculate the total present value of Josephs lottery prize using the concept of present value annuity and factoring in the growing payments Her... View the full answer

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