You just won the lottery. Congratulations! The jackpot is $85,000,000 paid in eight equal annual payments....

You just won the lottery. Congratulations! The jackpot is $85,000,000 paid in eight equal annual payments. The first payment on the lottery jackpot will be made today. In present value terms, you really won ______ assuming annual interest rate of 11.00%. Show work or formula in excel.

Expert Solution

Amount of jackpot	85,000,000
Annual payment	10,625,000

Year	Payment	Present Value Factor	Present Value
0	10,625,000	1.00000	10,625,000
1	10,625,000	0.90090	9,572,072
2	10,625,000	0.81162	8,623,488
3	10,625,000	0.73119	7,768,908
4	10,625,000	0.65873	6,999,017
5	10,625,000	0.59345	6,305,420
6	10,625,000	0.53464	5,680,559
7	10,625,000	0.48166	5,117,621
		Present Value	60,692,085

Amount really won = $60,692,085

Formulae are:

jeff jeffy answered 3 months ago

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