Financial Accounting?


Financial Accounting?

The question

On January 1, 2012, you win $ 110,000,000 in the state lottery. The $ 110,000,000 prize will be paid in equal installments of $ 11,000,000 over 10 years. The payments will be made on December 31 of each year, beginning on December 31, 2012. If the current interest rate is 6.5%, determine the present value of your winnings. Use Table 1 and Table 2 in the present value tables in Appendix A. Round to nearest whole dollar.

Best answers:

best student loans

PVoa = PMT * (1 – (1+i)^-n ) / i

PVoa = $ 11,000,000 * 7.18883
PVoa = $ 79,077,133

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