You just won the grand prize in a national writing contest! As your prize, you will receive $1,000 a month for 15 years. If you can earn 7 percent on your money, what is this prize worth to you today

The prize is worth $111,258.73.

Explanation:

Giving the following information:

Cf = $1,000 a month

Interest rate = 0.07/12 = 0.005833

Number of months = 15*12 = 180

First, we need to calculate the final value:

FV = {A*[ (1+i) ^n-1]}/i

A = cash flow

FV = {1,000*[ (1.005833^180) - 1]} / 0.005833

FV = $316,951.28

Now, the present value:

PV = FV / (1+i) ^n

PV = 316,951.28 / (1.005833^180)

PV = $111,258.73