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Consider a lottery that pays to the winner an annuity of $100 that begins immediately (an annuity due) and then annually in year 1 through
Consider a lottery that pays to the winner an annuity of $100 that begins immediately (an annuity due) and then annually in year 1 through year 26 with one exception. Because of high administrative costs associated with running the lottery, the payment in year 21, and only 21, is not $100 but $0. Using an interest rate of 6%, determine the present value of this cash flow stream.
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