Richard won a lottery that will pay him $460000 at the end of each of the next twenty years. Assuming an appropriate interest rate is 8% compounded annually, what is the present value of this amount?

Present Value = $4,516,347.81

Explanation:

Giving the following information:

Richard won a lottery that will pay him $460,000 at the end of each of the next twenty years.

interest rate = 8% compounded annually.

First, we need to calculate the final value of the investment:

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

A = annual pay

FV = {460,000*[ (1.08^20) - 1]} / 0.08

FV = $21,050,503.58

Now, we can determine the present value:

PV = FV / (1+i) ^n

PV = 21,050,503.58 / 1.08^20

PV = $4,516,347.81