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A lottery prize worth $1,000,000 is awarded in payments of $10,000 five times a year for 20 years. Suppose the money is worth 20% compounded five times per year.

What is the formula used to find the present value of the prize?
14 years ago

Answers

Reiny
i = .20/5 = .04
n = 20x5 = 100

PV = 10 000(1 - 1.04^-100)/.04
= 245 049.99

20% interest!!! Wow, what fantasy place is this?
14 years ago

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