Question

A lottery game offers a prize of $ 200,000 at the end of thirty years. If the interest rate is 6 6​%, the present value of this amount is ​$_________

Answer 1

$34,822.03

Explanation:

Future value after 30 years (FV) = $200,000

Time (t) = 30 years

interest rate (r) = 6% =0.06

The equation for obtaining the present value given the future value is:

`PV = (FV)/((1+r)^n)`

Applying the data provided:

`PV = (\$200,000)/((1+0.06)^(30))\\PV=\$34,822.03`

The present value of the lottery prize amount is $34,822.03.