Suppose a state lottery prize of $8 million is to be paid in 5 payments of $1,600,000 each at the end of each of the next 5 years. If money is worth 12%, compounded annually, what is the present value of the prize? (Round your answer to the nearest cent.)

Suppose a state lottery prize of $8 million is to be paid in 5 payments of $1,600,000 each at the end of each of the next 5 years. If money is worth 12%, compounded annually, what is the present value of the prize? (Round your answer to the nearest cent.)

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter1: Understanding Personal Finance

Section1.4: Perform Time Value Of Money Calculations

Problem 3CC

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Suppose a state lottery prize of $8 million is to be paid in 5 payments of $1,600,000 each at the
end of each of the next 5 years. If money is worth 12%, compounded annually, what is the present
value of the prize? (Round your answer to the nearest cent.)

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