A state lottery gives a winner the choice of receiving the winning amount in equal monthly payments for 20 years or receiving a lump sum equal to the present value of an annuity with future value equal to the winnings. The winner selecting monthly payments will receive $4,000,000/240 = $16,666.67 each month for each million dollars of winnings. (Round your final answers to two decimal places.) (a) Find the present value of an annuity with monthly payments of $16,666.67, at an Interest rate of 5.2% for 20 years, for the winner who wants a lump-sum payment. $ X (b) In order for the lottery to be more profitable, it is decided to pay the winnings in equal monthly payments for 25 years. Find the monthly payments of $4 million in winnings. $ Find the present value of an annuity with those monthly payments at 5.2% for 25 years.

A state lottery gives a winner the choice of receiving the winning amount in equal monthly payments for 20 years or receiving a lump sum equal to the present value of an annuity with future value equal to the winnings. The winner selecting monthly payments will receive $4,000,000/240 = $16,666.67 each month for each million dollars of winnings. (Round your final answers to two decimal places.) (a) Find the present value of an annuity with monthly payments of $16,666.67, at an Interest rate of 5.2% for 20 years, for the winner who wants a lump-sum payment. $ X (b) In order for the lottery to be more profitable, it is decided to pay the winnings in equal monthly payments for 25 years. Find the monthly payments of $4 million in winnings. $ Find the present value of an annuity with those monthly payments at 5.2% for 25 years.

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter6: Saving And Investing

Section6.1: Why Save?

Problem 6R

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