Present Value of an Annuity
On January 1 you win $2,600,000 in the state lottery. The $2,600,000 prize will be paid in equal installments of $260,000 over 10 years. The payments will be made on December 31 of each year, beginning on December 31. If the current interest rate is 5%, determine the present value of your winnings. Use the present value tables in Exhibit 7. Round to the nearest whole dollar.
5.5% 6% s,5% 79 Present Value of Ordinary Annuity of $1 per Period Periods 4.0% 4,5% 5% 0.96154 0.95694 095238 1.88609 1.87267 185941 2.77509 2.7486 2.72325 36290 3,58753 3,54595 4.45182 4.38998 432948 0.94787 1.24632 2.59793 3.50515 4.27028 0.94340 1.83339 2,67301 3.46511 4.21236 0.93897 1.82063 2.6484 3,42580 4.15568 0.93458 1.80802 2.62432 3.38721 4.1020 5.24214 600205 6.73274 7.43533 8.1100 5.15787 5.89270 6.59589 7.26879 7.91272 57569 5.78637 .46321 7.10782 772173 4.99553 5.68297 6.33457 6.95220 7.53763 4.91732 5.58238 6.20979 6,80169 7.36009 4.84101 5.48452 6.08875 6.65610 7.18883 4.76654 5.38929 5.97130 6.51523 7.02358 8.76048 9,38507 9.98565 10.56312 11.11839 8.52892 9.11858 968285 10.22283 10.73955 8.30641 8.86325 9.39357 9.89864 10.37966 8.09254 8.61852 9.11708 9.58965 10.03758 7.88687 8.38384 8.85268 9.29498 9.71225 7.68904 8.15873 8.59974 9.01384 9.40267 7,49867 7.94269 8,35765 874547 9.10791 1165230 12.16567 12.65930 13.133944 13.59033 11.23402 11.70719 12.15999 12.59329 13.00794 10.83777 1127407 11,58959 12.08532 12.46221 10.46216 10646 11.24607 11.60765 11.95038 10.10590 10.47726 10.32760 11.15812 11.46992 9.76776 10.11058 10.43247 10.73471 11.01851 9.44665 9.76322 10.05909 10.33560 10.59401 14,02916 14.45112 14.85684 15.2466 1552208 13.40472 13.78442 14.14777 14.49548 14.82821 12.82115 13.1630 13.48857 13.79864 14.09394 12.27524 12.58317 12.87504 13.15170 13.41393 11.76408 12.04158 12.30338 12.55036 12.78336 11.28498 11.53520 11.77014 11.99074 12.19788 10.83553 11.06124 11.27219 11.46933 11.55358 15.98277 16.32959 16,66306 16.93371 17.29203 15.14661 15.45130 15.74287 16.02189 16,28889 14.37519 1464303 14,39813 15.14107 1537245 13.6250 13.39810 14.12142 14.33310 14.53375 13.00317 13.21053 13.40616 13.59072 13.76483 12.39237 12.57500 12.74648 12.30749 13.05868 11.32578 11.98671 12.13711 12.27767 12.40904 17.58849 17.87355 18.14765 18.41120 18.66461 16,54439 16.78889 17.02286 17.24676 17.46101 15.59281 15.80268 16.00255 16.1920 16.37419 14.72393 14.0420 15.07507 15.23703 15.39055 13.92909 1408404 14.23023 14.36814 14.49825 13.20063 13.33393 13.45909 13.57661 13.68696 12.53181 12.64656 1275379 12.3540 12.94767 19.79277 18.40158 17.15909 16.O4612 15.04630 14.14553 13.33171 20.72004 19.15635 1777407 16.54773 15.45583 14.48023 13.60552 21.48218 19.76201 18.25593 16.93152 15.76186 14.72452 13.80075 Present Value of Ordinary Annuity of $1 per Period Periods 8% 9% 10% 11% 12% 13% 14 0.92593 178326 2.57710 3.31213 3.99271 0.91743 1.75911 2.53129 3.23972 3.88965 0.90909 1.73554 2.48685 3.16987 3.79079 0.90090 1.71252 2.44371 3.10245 3.69590 0.84286 1.69005 2.40183 3.03735 3.60478 0.88496 1.66810 2.36115 2.97447 3.51723 0.87719 154666 2.32163 2.91371 3.43308 4.62288 5,20637 5.74664 6.24689 6.71008 4.48592 5.03295 5.53482 5.99525 6.41766 4.35526 4.86842 5.33493 5.7502 6.14457 4.23054 4.71220 5.14612 5.53705 5.88923 4.11141 4.56376 4.96764 5.32825 5.65022 3.99755 4,42261 4.7677 5.13166 5.42624 3.88867 4.28830 4.63886 4.94637 5.21612 7.13896 7.53608 7.90378 8.22424 8.55948 6.80519 7.16073 7.48690 7,78615 8.06069 6.49506 6.81369 7.10336 7.36669 7.60608 6.20652 6.49236 6.74987 6.96187 7.19087 5.93770 6.19437 6.42355 6.52817 6.81086 5.58694 5.91765 6.12181 6.30249 6.46238 5.45273 5.66029 5.84236 6.00207 6.14217 8.85137 g12164 9.37189 9.60360 9.81815 8.31256 8.54363 8.75563 8.95011 912855 7.82371 8.02155 8.20141 8.36492 8.51356 7.37916 7.54879 7.70162 7.83929 7.96333 6.97399 7.11963 7.24967 7.36578 7.46944 6.60388 6.72909 6.83991 6.93797 7.02475 6.26506 6.37286 6.46742 6.55037 6.62313 = 10.01680 10.20074 10.37106 10.52876 10.67478 9.29224 9.44243 9.58021 9.70661 9.82258 8.64869 8.77154 8.88322 8.98474 9.07704 8.07507 8.17574 8.26643 8.34814 8.42174 7.56200 7.64465 7.71843 7.78432 7.84314 7.10155 7.16951 7.22966 7.28288 7.32998 6.68696 6,74294 6,79206 6.83514 6.87293 10.80998 10.93516 11.05108 11.15841 11.25778 9.9287 1002658 10.11613 10.19828 10.27365 9.16095 9.23722 9.30657 9.36961 9.42691 8.48806 8.54780 8.60162 8.55011 8.69379 7.89566 7.94255 7.98442 8.02181 8.05518 7.37167 7.40856 7.44120 7.47OD9 7.49565 6.9O508 6.93515 6.96066 6.98304 7.00266 11.34980 11.43500 11.51389 11.58693 11.65457 10.34280 10.40624 10.46444 10.51784 10.56682 9.47901 9.52638 9.56943 9.50857 9.54416 8.73315 8.76860 8.B0054 8.82932 8.85524 8.08499 8.11159 8.13535 8.15656 8.17550 7.51828 7.53830 7.55602 7.57170 7.58557 7,01988 7.03498 7.04823 7.05985 7.07005 11.92461 10.75736 9.779O5 8.95105 8.24378 7.63438 7.10504 12.10840 10.88120 9.86281 9.O0791 8.28252 7.66086 7.12322 12.23348 10.96168 9.91481 904165 8.30450 7.67524 7.13266
