Explain why there is a difference between the present value of the Strayer lottery jackpot and the future value of the twenty-six annual payments based on your calculations and the information provided. First installment is received immediately and remaining over 26-1= 25 Present Value of periodic payment= P* (1- (1+r) ^-n)/r = 423,076.923*(1-(1+0.093807)-25)/0.094 = 4,030,716.32 And the total present value, after adding the first installment, Total Present value = 423,076.923+4,030,716.32 = 4,453,793.24 The Present value of the payments is $4,453,793.24
Explain why there is a difference between the present value of the Strayer lottery jackpot and the future value of the twenty-six annual payments based on your calculations and the information provided. First installment is received immediately and remaining over 26-1= 25 Present Value of periodic payment= P* (1- (1+r) ^-n)/r = 423,076.923*(1-(1+0.093807)-25)/0.094 = 4,030,716.32 And the total present value, after adding the first installment, Total Present value = 423,076.923+4,030,716.32 = 4,453,793.24 The Present value of the payments is $4,453,793.24
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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Explain why there is a difference between the
First installment is received immediately and remaining over 26-1= 25
Present Value of periodic payment= P* (1- (1+r) ^-n)/r
= 423,076.923*(1-(1+0.093807)-25)/0.094
= 4,030,716.32
And the total present value, after adding the first installment,
Total Present value = 423,076.923+4,030,716.32
= 4,453,793.24
The Present value of the payments is $4,453,793.24
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