# Calculate maximum lump sum amount for future payments

Assume I won the 100 million dollars in a lottery that paid installments of 20 million dollars a year for five payments or a lump sum payment. I would get the first installment payment on the day I won the lottery and installments to follow for the next four years. Or I could take the lump sum payment the day I won the lottery. What is the maximum lump sum payment the state should offer me? Show your work and explain you answer. Assume the current interest rate is 5% per year.

© BrainMass Inc. brainmass.com October 10, 2019, 12:14 am ad1c9bdddfhttps://brainmass.com/economics/finance/calculate-maximum-lump-sum-amount-future-payments-284334

#### Solution Preview

Here periodic payment is made at the beginning of period. Maximum lump sum amount will be equal to ...

#### Solution Summary

The solution describes the steps to calculate maximum lump sum amount for future payments.

$2.19