Mr. Dubofsky just won a “Name That Tune” contest and collected a grand prize of $100,000....

Mr. Dubofsky just won a “Name That Tune” contest and collected a grand prize of $100,000. However, the contest stipulates that the winner will receive $10,000 immediately, and $10,000 at the end of each of the next 9 years. Assuming that Mr. Dubofsky can earn 10% on his money, how much has he actually won?

Expert Solution

Money he actually won is $63,349.26
Statement showing Cash flows
Particulars	Time	PVf 10%	Amount	PV
Cash inflows	-	1.0000	10,000.00	10,000.00
Cash inflows	2.00	0.9091	10,000.00	9,090.91
Cash inflows	3.00	0.8264	10,000.00	8,264.46
Cash inflows	4.00	0.7513	10,000.00	7,513.15
Cash inflows	5.00	0.6830	10,000.00	6,830.13
Cash inflows	6.00	0.6209	10,000.00	6,209.21
Cash inflows	7.00	0.5645	10,000.00	5,644.74
Cash inflows	8.00	0.5132	10,000.00	5,131.58
Cash inflows	9.00	0.4665	10,000.00	4,665.07
PV of Cash Inflows =PVCI				63,349.26

jeff jeffy answered 6 months ago

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