You just won the grand prize in a national writing contest! As your prize, you will receive $500 a month for 50 months. If you can earn 7 percent on your money, what is this prize worth to you today

Prize is $22,071.39 worth today

Explanation:

Present value of Annuity = A*[ (1 - (1+r) ^-n) / r]

A - Annuity payment = 500

r - rate per period = 6/12 =.5%

n - no. of periods = 50

Present value of Annuity = 500*[ (1 - (1.005) ^-50) /.005]

= 500*[ (1-0.77928606825) /.005]

= 500*44.14278635

= $22,071.39