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A small lottery prize offers $67 per year forever, with the first payment occurring today. If the relevant interest rate is 6% per year (as
A small lottery prize offers $67 per year forever, with the first payment occurring today. If the relevant interest rate is 6% per year (as an EAR), the value of the entire prize today is $. Hint: There is more than one way to solve this problem -- but however you solve it, all cash flows must be brought to the "year 0" point. Look carefully at the timing of these payments and compare that to what the PV Perpetuity formula assumes about timing. Margin of error for correct responses: +/- .05 Rounding and Formatting instructions: Do not enter dollar signs, percent signs, commas, X, or any words in your response. Do not round any intermediate work, but round your *final* response to 2 decimal places (example: if your answer is 12.3456,12.3456%, or $12.3456, you should enter 12.35 )
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