Exactly equal to the present value of annual installments

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Reference no: EM13953777

Francis Peabody just won the $89,000,000 California State Lottery. The lottery offers the winner a choice of receiving the winnings in a lump sum or in 26 equal annual installments to be made at the beginning of each year. Assume that the funds would be invested at 7.65%. Francis is trying to decide whether to take the lump or the annual installments. What is the amount of the lump sum that would be exactly equal to the present value of the annual installments? Round off to the nearest $1.

NOTE: Please use a financial calculator or formulas. DO NOT USE AN EXCEL SHEET.

A) $89,000,000

B) $13,092,576

C) $38,163,612

D) $41,083,128

Reference no: EM13953777

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