You just won the lottery! But how much did you "actually" win...?
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The $40 million lottery payment that you just won actually pays $2 million per year for 20 years. If the discount rate is 8 percent, and the first payment comes in 1 year, what is the present value of the winnings? What if the first payment comes immediately?
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Question 39
If the first payment comes in one year, we use, once again, the same formula as in question 1, setting C=2, i=0.08 and n=20. We thus get that the ...
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