Question

The Wisconsin Lottery will pay a lottery winner a lump sum payment of $19,046,180 as the final payment of her winnings in four years. If the appropriate discount rate for the payment is 8.6% what is the present value of the payment?

a. $5,191,977.
b. $5,408,309.
c. $116,741.
d. $17,899,197.
e. $17,899,197.

Answer 1

Answer: $13,692,683.93

Step-by-step explanation:

Present value = Amount / (1 + rate) ^ number of periods

= 19,046,180 / (1 + 8.6%)⁴

= $13,692,683.93

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