Determining the present value of an investment at a set rate
In May 1992, a 60 yr old nurse gambled $12 in a Reno casino and walked away with the biggest jackpot in history - $9.3 million. In reality, the jackpot wasn't really worth $9.3 million. The sum was to be paid in 20 annual installments of $465,000 each. What is the present value of the jackpot?
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The present value of these payments is simply the sum of the present values of each payment. But rather than valuing each payment separately, it is much easier to treat the cash ...
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This solution is comprised of a simple explanation of how to determine the present value of an investment at a set interest rate.
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