Show work please. Thank you You have just won the lottery and wil receive $1500,000 in one year. You wil receivepayments for 30 years, and the payments will increase 27 percent per year7the appropriate discount rate is 6.8 percent, what is the present value of yourwinnings? (Do not round Intermediate calculations and round your answer to 2decimal plac, 4 9,42.16Present value

Answered: the appropriate discount rate is 6.8…

the appropriate discount rate is 6.8 percent, what is the present value of your winnings? (Do not round Intermedilate calculations and round your answer to 2 decimal plecN, eg, 32.16)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 1QTD

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Question

Show work please. Thank you

You have just won the lottery and wil receive $1500,000 in one year. You wil receive
payments for 30 years, and the payments will increase 27 percent per year
7the appropriate discount rate is 6.8 percent, what is the present value of your
winnings? (Do not round Intermediate calculations and round your answer to 2
decimal plac, 4 9,42.16
Present value

Expert Solution

Step 1

Present Value:

It represents the present worth of the future periodic annuity payments. It is calculated by discounting these future annuity payments by an appropriate discount rate.

Information Provided:

Lottery amount (pmt) = $1,500,000

Number of payments (n) = 30

Growth rate (g) = 2.70%

Discount rate (r)= 6.80%

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