Chapter 8, Problem 6P

You just won a $625,000 lottery prize!  You will receive $25,000 per year for the next 25 years, starting today, a total of $625,000.  If the current interest rate is 1.9% compounded annually, what is the cash value of this prize?

You like to buy lottery tickets every week. The lottery pays an insurancecompany that pays the winner an annuity. If you win a $60,000,000 lotteryand elect to take an annuity, you get $3,000,000 per year at the beginningof each year for the next 20 years.a. How much must the state pay the insurance company if money can earn3 percent?b. How much interest is earned on this lump-sum payment over the 20 years?c. If you take the cash rather than the annuity, the state pays you $30,000,000in one lump sum today. You must pay 40 percent of this in taxes. If you arecurrently working and invest this money at 6 percent, how much moneywill you have in a mutual fund at the end of 20 years?d. Are you better off with the annuity, or should you take the cash? Explain.

You have Just won the lottery and will receive $490,000 in one year. You will receive payments for 29 years, and the payments will increase 4 percent per year. If the appropriate discount rate is 12 percent, what is the present value of your winnings?

As a result of winning the Gates Energy Innovation​ Award, you are awarded a growing perpetuity. The first payment will occur in a year and will be for ​$10,000. You will continue receiving monetary awards annually with each award increasing by 5 percent over the previous​ award, and these monetary awards will continue forever. If the appropriate interest rate is 12 ​percent, what is the present value of this​ award?

A winner of the multi - state lotto won a one time payout and decided to invest part of it into an annuity. If the winner invests $6,700,000.00 into a 30 year annuity that pays 3.5%, compounded monthly and makes each month payments. What is the amount of each month payments? The payment would be $. (Round to 2 decimal places.)

Your dreams of becoming rich have just come true. You have won the State of​ Tranquility's Lottery. The State offers you two payment plans for the​$4,000,000 advertised jackpot. You can take annual payments of $160,000 at the end of the year for the next 25 years or $1,864,573 today. b. If your investment rate over the next 25 years is 6​%, what is the present value of the ​$160,000 annual payments​ today?

A lottery corporation sells a ticket for a chance to win $500,000. If you win, the prize winnings will be spread out over time with your first payment of $150,000 today. The second payment of $ 150,000 would be released to you in a year, and the last payment of $200,000 would be released the following year. If you could earn 3.5% compounded annually, what is the value of the prize today?

You have just received notification that you have won the $1.5 million first prize in the Centennial Lottery. However, the prize will be awarded on you 100th birthday assuming you're around the collect, 63 a years from now. What is the present value of your windfall if the appropriate discount rate is 8 percent?

Congratulations, you just won the lottery! As the winner, you will receive payments of $2 million at the beginning of every year over the next 10years. The first payment will be paid out already today. What is the present value of your lottery winnings? Assume an interest rate of 5% per year. Answer in millions of dollars with 2 decimals (for example, if your answer is 12, 160,000 enter 12.16).