Analyze the pw of the payments for real interest rates

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Reference no: EM132171377

Question: Different lottery winners have different interest rates for the time value of money.

(a) Analyze the PW of the payments for real interest rates ranging from 5% to 12%.

(b) Repeat part a with four curves for inflation rates of 0%, 3%, 6%, and 9%.

Problem: A lottery pays the winner $1 million, in 20 equal payments of $50,000. The payments are received at the end of the year, and the winner's interest rate is 12%. What is the present worth of the winnings?

Reference no: EM132171377

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