Ask Question
9 January, 20:56

ou have just received notification that you have won the $2 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you're around to collect), 64 years from now. What is the present value of your windfall if the appropriate discount rate is 9 percent?

+2
Answers (1)
  1. 9 January, 22:17
    0
    PV = $8,048.86

    Explanation:

    Giving the following information:

    Future value = $2,000,000

    Number of years = 64

    Discount rate = 9%

    To calculate the value of the price in the present, we need to discount the future value at the appropriate rate.

    We need to use the following formula:

    PV = FV / (1+i) ^n

    PV = 2,000,000 / (1.09^64) = $8,048.86
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “ou have just received notification that you have won the $2 million first prize in the Centennial Lottery. However, the prize will be ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers