On January 1, you win $1,440,000 in the state lottery. The $1,440,000 prize will be paid in equal installments of $180,000 over 8 years. The payments will be made on December 31 of each year, beginning on December 31. If the current interest rate is 6%, determine the present value of your winnings.
On January 1, you win $1,440,000 in the state lottery. The $1,440,000 prize will be paid in equal installments of $180,000 over 8 years. The payments will be made on December 31 of each year, beginning on December 31. If the current interest rate is 6%, determine the present value of your winnings.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
On January 1, you win $1,440,000 in the state lottery. The $1,440,000 prize will be paid in equal installments of $180,000 over 8 years. The payments will be made on December 31 of each year, beginning on December 31. If the current interest rate is 6%, determine the present value of your winnings.
Transcribed Image Text:Periods 4%
1
2
3
4
5
6
7
8
9
10
Exhibit 7 Present Value of an Annuity of $1 at Compound Interest
4½%
12%
0.89286
0.96154 0.95694
1.88609 1.87267
5%
5½%
6% 6½% 7% 10% 11%
0.95238 0.94787 0.94340 0.93897 0.93458 0.90909
0.90090
1.85941 1.84632 1.83339 1.82063 1.80802 1.73554 1.71252 1.69005
2.77509 2.74896 2.72325 2.69793 2.67301 2.64848 2.62432 2.48685 2.44371 2.40183
3.62990 3.58753 3.54595 3.50515 3.46511 3.42580 3.38721 3.16987 3.10245 3.03735
4.45182 4.38998 4.32948 4.27028 4.21236 4.15568 4.10020
5.24214 5.15787 5.07569 4.99553 4.91732 4.84101 4.76654
6.00205 5.89270 5.78637 5.68297 5.58238 5.48452 5.38929
6.73274 6.59589 6.46321 6.33457 6.20979 6.08875 5.97130 5.33493 5.14612 4.96764
7.10782 6.95220 6.80169 6.65610 6.51523 5.75902 5.53705 5.32825
7.72173 7.53763 7.36009 7.18883 7.02358 6.14457 5.88923 5.65022
3.79079 3.69590
3.60478
4.35526 4.23054 4.11141 3.99755
4.86842 4.71220 4.56376
4.42261
4.79677
5.13166
7.43533 7.26879
8.11090 7.91272
5.42624
13%
0.88496
1.66810
2.36115
2.97447
3.51723
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education