Question

In: Finance

You have just received notification that you have won the $2.04 million first prize in the...

You have just received notification that you have won the $2.04 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you’re around to collect), 82 years from now.

What is the present value of your windfall if the appropriate discount rate is 8 percent?

Solutions

Expert Solution

amount of prize received in 82 years from now (future value)= 2040000

discount rate (i) = 8%

years gap from today (n) = 82

present value of amount = future value/(1+i)^n

=2040000/(1+8%)^82

=3705.802052

present value of your windfall is $3705.80

jeff jeffy answered 2 years ago
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