the winner of a lottery chooses to receive annual payments of $170,000 at the end of each year for 25 years. if the current interest rate is 4.8% find the present value
Added by Matthew M.
Step 1
The formula is: \[ PV = P \times \left(1 - (1 + r)^{-n}\right) / r \] Where: - \(PV\) = Present Value - \(P\) = Payment per period ($170,000) - \(r\) = Interest rate per period (4.8% or 0.048) - \(n\) = Total number of payments (25) Now, let's go through the Show more…
Show all steps
Your feedback will help us improve your experience
Akash M and 82 other Principles of Accounting educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Recommended Videos
A person recently won a state lottery. The terms of the lottery are that the winner will receive annual payments of $20100 at the end of this year and each of the following 3 years. If the winner could invest money today at the rate of 8 percent per year compounded annually, what is the present value of the four payments?
Akash M.
The winner of a lottery is awarded $1,000,000 to be paid in annual installments of $50,000 for 20 years. Alternatively, the winner can accept a "cash value" one-time payment of $450,000. The winner estimates he can earn 7% annually on the winnings. What is the present value of the installment plan? (Round your answer to two decimal places.)
Nick J.
Recommended Textbooks
Horngren’s Cost Accounting
Cost Accounting A Managerial Emphasis
Principles of Accounting Volume 1: Financial Accounting
Transcript
18,000,000+
Students on Numerade
Trusted by students at 8,000+ universities
Watch the video solution with this free unlock.
EMAIL
PASSWORD