Question
As a new employee in the Lottery Commission, your first job is to design a new game and prize. Your idea is to create two
As a new employee in the Lottery Commission, your first job is to design a new game and prize. Your idea is to create two grand prize choices. The first prize is the amount of $330 in 4 years. The second prize is to receive the amount of $110 immediately followed by some unknown annuity that is paid at the end of each year for 4 years with the first annuity payment received at the end of year 1. Using an interest rate of 5.50%, determine the unknown annuity amount for the second prize that would make the present value of both prizes equivalent.
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