Need help with business and finance question

Business & Finance
Tutor: None Selected Time limit: 1 Day

If you win the lottery for $40 million and elected to receive $2 million per year for 20 years at a 4% interest rate each year. What is the present value of the lottery? How much interest is earned on the present value to make the $2 million per-year payment?

Oct 25th, 2015

Thank you for the opportunity to help you with your question!

To calculate the present value of the lottery, we will use the annuity formula i.e

Present Value of Annuity Formula
p.v = 2* [1-(1+0.04)^-20]/0.04

by calculating answer will be $27.18

Please let me know if you need any clarification. I'm always happy to answer your questions.
Oct 25th, 2015

Any question? Ask here. keep posting for me.

thank you

Oct 25th, 2015

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May 27th, 2017
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