Question
Present value of an annuity On January 1, you win $34,500,000 in the state lottery. The $34,500,000 prize will be paid in equal installments of
Present value of an annuity
On January 1, you win $34,500,000 in the state lottery. The $34,500,000 prize will be paid in equal installments of $5,750,000 over six years. The payments will be made on December 31 of each year, beginning on December 31 of this year. The current interest rate is 4.5%. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below.
Open spreadsheet
Determine the present value of your winnings. Round your answer to the nearest dollar.
| Present value of an annuity | |||
| DATA | |||
| Sum of prize | $34,500,000 | ||
| Annual payment | $5,750,000 | ||
| Number of years | 6 | ||
| Interest rate | 4.5% | ||
| Date of win | January 1 | ||
| Date of payments | December 31 of each year | ||
| Using formulas and cell references, perform the required analysis, and input your answer into the Amount column. Transfer the numeric result for the green entry cell (B14) into the appropriate field in CNOWv2 for grading. | |||
| Amount | Formula | ||
| PV of annual payments | |||
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Accounting for Governmental and Nonprofit Entities
Authors: Jacqueline Reck, Suzanne Lowensohn, Earl Wilson
17th edition
78025826, 978-1259564239, 1259564231, 978-0078025822
