Question
You won the lottery, and the jackpot was $12,000,000. You can either receive the $12,000,000 in equal installments over 20 years, or you can receive
You won the lottery, and the jackpot was $12,000,000. You can either receive the $12,000,000 in equal installments over 20 years, or you can receive a lump sum today. The amount of the lump sum youll receive today is based on the present value of the equal installment payments. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor from the PV tables.) a. What is the present value of the lottery winnings taken in equal installments over 20 years at 8% interest? (Round your answer to the nearest dollar amount.) b. What is the present value of the lottery winnings taken in equal installments over 20 years at 10% interest? c. Which interest rate yields the greatest amount of cash today?
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