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27 August, 06:13

You just won the $87 million Ultimate Lotto jackpot. Your winnings will be paid as $2,900,000 per year for the next 30 years. If the appropriate interest rate is 6.2 percent, what is the value of your windfall

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  1. 27 August, 06:36
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    In order to calculate the value of your windfall we would have to calculate the following formula:

    Value of windall=P*[1 - (1: (1+r) ^n) ]:r

    According to the given data we have the following:

    Interest rate per annum=6.20%

    Number of years = 30

    Number of compoundings per per annum=1

    Payment per period (P) = $2,900,000

    Therefore, Value of windall=$2,900,000 * (1 - (1: (1+6.2%) ^30)) : 6.2%

    Value of windall=$39,078,091.71

    The value of your windfall is $39,078,091.71
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