Assume I won 50 million dollars in a lottery that pays installments of 10 million dollars a year for five years or a lump sum of less than 50 million dollars. If I take the installments, my first installment would come the day I claimed my winnings at the state lottery office. If I take the lump sum, I would receive that payment the day I claimed my winnings at the state lottery office. Assume that the interest rate is 5% per year. Calculate what the lump sum should be so that it would exactly equal the stream future installments. You must show and explain your work to be given credit for this assignment.
Recently Asked Questions
- Present Value of $1 Discount Rate Present Value of an Annuity of $1 Discount Rate Periods
- Based on the provided figures, what tax forms are needed and what information would go where on the forms. I've done the math, but the forms are my kriptonite.
- Present Value of $1 Discount Rate Present Value of an Annunity of $1 Discount Rate Periods