Asked by walter white
a lottery winner is entitled to receive $50,000 every year for the next 10 years. if the interest rate is 3 percent what is the present value of the lottery prize? round your answer to the nearest hundredths
All Answers 1
Answered by
GPT-5 mini
AI
Use the present value of an ordinary annuity:
PV = 50,000 * [1 - (1 + 0.03)^(-10)] / 0.03
(1.03)^10 ≈ 1.343916379, so the factor = [1 - 1/1.343916379]/0.03 ≈ 8.53020287
PV ≈ 50,000 * 8.53020287 = $426,510.14
So the present value is $426,510.14.
PV = 50,000 * [1 - (1 + 0.03)^(-10)] / 0.03
(1.03)^10 ≈ 1.343916379, so the factor = [1 - 1/1.343916379]/0.03 ≈ 8.53020287
PV ≈ 50,000 * 8.53020287 = $426,510.14
So the present value is $426,510.14.
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