Explore BrainMass

Explore BrainMass

    You just won the lottery! But how much did you "actually" win...?

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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?

    © BrainMass Inc. brainmass.com June 3, 2020, 6:28 pm ad1c9bdddf

    Solution Preview

    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 ...

    Solution Summary

    You will find the answer to this puzzling question inside...