The multistate Powerball Lottery, worth $182 million, was won by a single individual who had purchased five tickets at $1 each. The winner was given two choices: receive 26 payments of $7 million each, with the first payment to be made now and the rest to be made at the end of each of the next 25 years, or receive a single lump-sum payment now that would be equivalent to the 26 payments of $7 million each. If the state uses an interest rate of 4% per year, find the amount of the lump sum payment.

The multistate Powerball Lottery, worth $182 million, was won by a single individual who had purchased five tickets at $1 each. The winner was given two choices: receive 26 payments of $7 million each, with the first payment to be made now and the rest to be made at the end of each of the next 25 years, or receive a single lump-sum payment now that would be equivalent to the 26 payments of $7 million each. If the state uses an interest rate of 4% per year, find the amount of the lump sum payment.

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter27: Time Value Of Money (compound)

Section: Chapter Questions

Problem 7E

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