You have just won $1,000,000 in the Tennessee Lottery. You will receive payments of $40,000 per...

You have just won $1,000,000 in the Tennessee Lottery. You will receive payments of $40,000 per year (at the end of each year) for the next 25 years. If the discount rate is 8 percent, what are your winnings worth today? How would I input this information using a financial calculator?

Solutions

Expert Solution

Inputs required for a financial calculator

FV = 1000000

PMT = 40000

Nper = 25

Rate (I/Y) = 8%

Using PV function of the excel :

=PV(0.08,25,40000.1,0)

= 426992.12

We can input the same thing on a financial calculator and we will get the same present value.

jeff jeffy answered 2 years ago

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