You recently won $80 million in lottery. You will receive 20 payments of $4 million per...

You recently won $80 million in lottery. You will receive 20 payments of $4 million per year (starting from today). If the interest rate is 6.5%, what is your lottery payment worth today?

Expert Solution

year	Cash flow	PVIF @ 6.5%	present value
1	4	1	$ 4.00
2	4	0.938967136	$ 3.76
3	4	0.881659283	$ 3.53
4	4	0.827849092	$ 3.31
5	4	0.777323091	$ 3.11
6	4	0.729880837	$ 2.92
7	4	0.685334119	$ 2.74
8	4	0.643506215	$ 2.57
9	4	0.604231188	$ 2.42
10	4	0.567353228	$ 2.27
11	4	0.532726036	$ 2.13
12	4	0.50021224	$ 2.00
13	4	0.469682854	$ 1.88
14	4	0.441016765	$ 1.76
15	4	0.414100249	$ 1.66
16	4	0.388826524	$ 1.56
17	4	0.365095328	$ 1.46
18	4	0.342812515	$ 1.37
19	4	0.321889685	$ 1.29
20	4	0.302243836	$ 1.21
			$ 46.94


Payment worth today =			$ 46.94

jeff jeffy answered 1 year ago

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