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The Caldwell Herald newspaper reported the following story: Frank Ormsby of Caldwell is the state's newest millionaire. By choosing the six winning numbers on last week's state lottery, Mr. Ormsby won the week's grand prize totaling $1.42 million The State Lottery Commission indicated that Mr. Ormsby will receive his prize in 20 annual installments of $71,000 each. Required: 1. If Mr. Ormsby can invest money at a 7% rate of return, what is the present value of his winnings? Note: Enter your answer in dollars and not in millions of dollars.

The Caldwell Herald newspaper reported the following story: Frank Ormsby of Caldwell is the state's newest millionaire. By choosing the six winning numbers on last week's state lottery, Mr. Ormsby won the week's grand prize totaling $1.42 million The State Lottery Commission indicated that Mr. Ormsby will receive his prize in 20 annual installments of $71,000 each. Required: 1. If Mr. Ormsby can invest money at a 7% rate of return, what is the present value of his winnings? Note: Enter your answer in dollars and not in millions of dollars.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Caldwell Herald newspaper reported the following story: Frank Ormsby of Caldwell is the state's newest millionaire. By choosing the six winning numbers on last week's state lottery, Mr. Ormsby won the week's grand prize totaling $1.42 million. The State Lottery Commission indicated that Mr. Ormsby will receive his prize in 20 annual installments of $71,000 each. Required: 1. If Mr. Ormsby can invest money at a 7% rate of return, what is the present value of his winnings? Note: Enter your answer in dollars and not in millions of dollars. Present value
Transcribed Image Text:The Caldwell Herald newspaper reported the following story: Frank Ormsby of Caldwell is the state's newest millionaire. By choosing the six winning numbers on last week's state lottery, Mr. Ormsby won the week's grand prize totaling $1.42 million. The State Lottery Commission indicated that Mr. Ormsby will receive his prize in 20 annual installments of $71,000 each. Required: 1. If Mr. Ormsby can invest money at a 7% rate of return, what is the present value of his winnings? Note: Enter your answer in dollars and not in millions of dollars. Present value
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