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You just won the lottery, which promises you $990,000 per year for the next 20 years. You receive the first payment today (hint: annuity due). If your discount rate is 9.75%, what is the present value of your winnings

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akindelemf

Answer:

The present value of your winnings is $9,410,263.59

Explanation:

Present value of annuity due=(1+rate)*Annuity[1-(1+interest rate)^-time period]/rate

=1.0975 x 990,000 [1-(1.0975)⁻²⁰]/0.0975

=990,000 x 9.50531677

=$9,410,263.59

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