Question
A state lottery commission pays the winner of the Million Dollar lottery 10 installments of $100,000/year. The commission makes the first payment of $100,000 immediately
A state lottery commission pays the winner of the Million Dollar lottery 10 installments of $100,000/year. The commission makes the first payment of $100,000 immediately and the other n = 9 payments at the end of each of the next 9 years.
Assume that the balance on deposit with the bank earns interest at the rate of 3%/year compounded yearly.
Determine the present value (in dollars) of the 9 future payments. (Round your answer to the nearest cent.)
$
Determine how much money (in dollars) the commission should have in the bank initially to guarantee the payments. (Round your answer to the nearest cent.)
$
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