60.7k views
4 votes
The winner of a state lottery will receive​ $5,000 per week for the rest of her life. If the​ winner's interest rate is​ 6.5% per year compounded​ weekly, what is the present worth of this​ jackpot? Assume there are 52 weeks per year.

User Delebrin
by
7.9k points

1 Answer

5 votes

Answer:

$4,000,000

Step-by-step explanation:

The computation of Present Value of Annuity is shown below:-

Present Value of Annuity = Amount ÷ Rate of Interest

Rate of Interest = 6.5% per year compounded weekly

or Rate of Interest = 6.5 ÷ 52

= 0.125% per week

Present Value of Annuity = Amount ÷ Rate of Interest

= $5,000 ÷ 0.00125

= $4,000,000

Therefore for computing the present value of annuity we simply applied the above formula.

User Zoon
by
9.0k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories