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Return to Jack and Diane, the Set for Life Lottery, and the prize of 20 consecutive annual payments of $50,000 beginning one year from today.
Return to Jack and Diane, the Set for Life Lottery, and the prize of 20 consecutive annual payments of $50,000 beginning one year from today. And, as a bonus, the fifth payment and only the fifth payment includes an extra $25,000 so that the amount received at the end of year 5 is $75,000. Jack looks at Diane and says "can you believe it; us, millionaires." Are they? Which of the following comes closest to the present value of their prize using an interest rate of 2%.
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