Suppose that you have won the UK National Lottery.You will receive the prize money in 20 installments.The first installment is an immediate payment of £100000,and then you will receive 19 yearly payments for the same amount starting one year after the initial payment.i.The operator of the National Lottery buys an annuity to cover this.If the effective annual interest rate is 4%,How much does the operator pay for this annuity?II.If you pay 40% tax on the lottery payments,and inflation averages 6% per year,then what is the purchasing power of the final payment,after taxes,in today’s pounds?
Suppose that you have won the UK National Lottery.You will receive the prize money in 20 installments.The first installment is an immediate payment of £100000,and then you will receive 19 yearly payments for the same amount starting one year after the initial payment.i.The operator of the National Lottery buys an annuity to cover this.If the effective annual interest rate is 4%,How much does the operator pay for this annuity?II.If you pay 40% tax on the lottery payments,and inflation averages 6% per year,then what is the purchasing power of the final payment,after taxes,in today’s pounds?
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Suppose that you have won the UK National Lottery.You will receive the prize money in 20 installments.The first installment is an immediate payment of £100000,and then you will receive 19 yearly payments for the same amount starting one year after the initial payment.i.The operator of the National Lottery buys an annuity to cover this.If the effective annual interest rate is 4%,How much does the operator pay for this annuity?II.If you pay 40% tax on the lottery payments,and inflation averages 6% per year,then what is the purchasing power of the final payment,after taxes,in today’s pounds?
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