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Q5 Jack and Diane are lottery winners. They hold the ticket to the Grand Prize in the Set for Life Prize that makes 20 consecutive
Q5
- Jack and Diane are lottery winners. They hold the ticket to the Grand Prize in the "Set for Life" Prize that makes 20 consecutive annual payments of $50,000 starting immediately. There is one hitch: the eleventh payment (to be received at the end of year 10) is not $50,000 but only $20,000 (that is, this payment is $30,000 LESS than the other 20). Which of the following comes closest to the present value of the prize if interest rates are 3%?
1.$ 743,867
2.$ 635,849
3.$ 551,529
4.$ 591,154
5.$ 686,430
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