How much in total would she have received

Reference no: EM131021109

A winner of the Pennsylvania Lottery was given the choice of receiving $18 million at once or $1,440,000 per year for 25 years.

a. If the winner had opted for the 25 annual payments, how much in total would she have received?

b. At an interest rate of 10 percent, what would be the present value of the 25 payments?

c. At an interest rate of 5 percent, what would be the present value of the 25 payments?

d. What interest rate would make the present value of the 25 payments equal to the one payment of $18 million? (This question is difficult and requires the use of a financial calculator or a spreadsheet. Hint: If you are familiar with the Excel spreadsheet program, use the RATE function. You can answer parts (b) and (c) by using the Excel PV [Present Value] function.)

Reference no: EM131021109

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