Use a Financial Calculator

Several years ago The Wall Street Journal reported that the winner of the Massachusetts State Lottery prize had the misfortune to be both bankrupt and in prison for fraud. The prize was $9,420,713 to be paid in 19 equal annual installments. (There were 20 installments but the winner had already received the first payment.) The bankruptcy court judge ruled that the prize should be sold off to the highest bidder and the proceeds used to pay off the creditors.

If the interest rate was 8%:

1) How much would you have been prepared to bid for the prize?

2) How much is the future value for the cash flow after 19 years?