What is the present value of your winnings

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Reference no: EM131825092

You have recently won the super jackpot in the Washington State Lottery. On reading the fine print, you discover that you have the following two options: a. You will receive 32 annual payments of $220,000, with the first payment being delivered today. The income will be taxed at a rate of 25 percent. Taxes will be withheld when the checks are issued. b. You will receive $635,000 now, and you will not have to pay taxes on this amount. In addition, beginning one year from today, you will receive $170,000 each year for 31 years. The cash flows from this annuity will be taxed at 25 percent. Using a discount rate of 8 percent, what is the present value of your winnings? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Reference no: EM131825092

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