Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Present Value of an Annuity On January 1, you win $1,360,000 in the state lottery. The $1,360,000 prize will be paid in equal installments of

Present Value of an Annuity

On January 1, you win $1,360,000 in the state lottery. The $1,360,000 prize will be paid in equal installments of $170,000 over 8 years. The payments will be made on December 31 of each year, beginning on December 31. If the current interest rate is 6%, determine the present value of your winnings. Use the present value tables in Exhibit 7. Round to the nearest whole dollar.

image text in transcribed
Exhibit 7 Present Value of an Annuity of $1 at Compound Interest Periods 4% 4%1% 5% 57% 6 % 6%% 0.96154 0.95694 0.95238 0.94787 0.94340 0.93897 1.886091.87267 1.85941 184632 1.83339 1.82063 2.77509 2.74896 2.72325 2.69793 2.67301 2.64848 3.62990 3.58753 3.54595 3.50515 3.46511 342580 445182 4.38998 4.32948 4.27028 4.21236 4.15568 5.24214 5.15787 5.075694.99553 4.91732 4.84101 6.00205 5.89270 5.78637 5.68297 5.58238 5.48452 6.73274 6.595896.46321 6.33457 6.209796.08875 7.435337268797.10782 6.95220 6.801696.65610 8.11090 7.91272 7.721737537637.360097.18883 7% 10% 11% 0.93458 0.909090.90090 1.80802 1.73554 1.71252 2.62432 248685244371 3.38721 3.16987 3.10245 4.10020 3.79079 3.69590 4.76654 4.35526 4.23054 5.389294.86842 4.71220 5.97130 5.33493 5.14612 6.51523 5.75902 5.53705 7.02358 6.14457 5.88923 12% 13% 0.89286 0.88496 1.69005 1.66810 240183 236115 3.03735 2.97447 3.60478351723 4.11141 3.99755 4.56376 442261 4.96764 4.79677 5.32825 5.13166 5.65022 542624 10

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting A Global Perspective

Authors: Rod Monger

1st Edition

0470518405, 978-0470518403

More Books

Students also viewed these Accounting questions

Question

6. What actions might make employers lose elections?

Answered: 1 week ago