You just won the TVM Lottery. You will receive $1 million today plus another 10 annual payments that increase by $400,000 per year. Thus, in one year you receive $1.4 million. In two years, you get $1.8 million, and so on. If the appropriate interest rate is 10 percent, what is the present value of your winnings?© BrainMass Inc. brainmass.com March 4, 2021, 8:51 pm ad1c9bdddf
Please see the attached file for complete details.
Year Amount Recd Present Value Factor @10% Present Value
Factor =1/(1.10)^n FV*PV Factor
0 $1,000,000 1.000000 $1,000,000
Solution describes the steps in calculating present value of cash flows of TVM lottery winningns.