Bu look dook look3. Congratulations! You have just won America's Got Talent and the much-ballyhooed grand prize of $1 million!However, had you read the fine print at the end of the show's credits, you would have seen that the prize isactually an annuity paid out in equal payments over a 40-year period (or $25,000 per year). If your opportunitycost is 6%, what is the actual value of this prize to you at the time of your victory? Assume the first payment ismade immediately. (Hint: this is an "annuity due" problem.)

Prize value = $1,000,000Annual payment = $25,000Interest rate = 6%Number of years = 40 years

Answered: 3. Congratula However, actually ar cost…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You just won the TVM Lottery. You will receive $1 million today plus another 10 annual payments that increase by $450,000 per year. Thus, in one year, you can receive $1.45 million. In two years, you get $1.9 million, and so on. If the appropriate interest rate is 6.2 percent, what is the value of your winnings today? (Please also provide financial calculator calculations if possible)
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can you solve in the excel file please. Thanks 2. ABC Lottery Corporation runs the "Millionaire Life" lottery. The winner of the Grand Prize can choose either $1,000,000 per year for 25 years or a single cash payment of $17,000,000. Which option should be chosen if the payments are made at the beginning of each year and, on low-risk investments, money can earn 3.2% compounded annually?

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3. Congratula However, actually ar cost is 6% made imm