Asked by Sofie
Brooke won $100 000 in a lottery. The price will be paid in yearly installments of $10 000 each year for 10 years. What is the present value of her winnings, if the current interest rates are 6.4% per annum, compounded annually?
Answers
Answered by
oobleck
P(1 + 0.064)^10 = 100000
P = 53,775.40
P = 53,775.40
Answered by
mathhelper
We are asked for the present value of an annuity
present value = $10,000(1 - 1.064)^-10 / .064
= $72,225.92
present value = $10,000(1 - 1.064)^-10 / .064
= $72,225.92
Answered by
oobleck
ouch! forgot about the payments!
good catch, as usual.
good catch, as usual.
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