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Calculate the present value of option b

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You just won the Power Ball Lottery worth $134,000,000. Upon reading the fine print, you learn that you have two options:
Option A: take the cash value of $75.3 million today (before taxes)
Option B: The winner is guaranteed to receive 30 graduated payments over 29 years; the first payment is made today. These payments will increase by 3% per year until the final payment. The first payment, received today, equals $6,000,000.
Assuming a required rate of return of 5%, calculate the present value of option B.

Reference no: EM133233963

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