Question

I- Gloria MacKenzie, and 84 year old Florida woman, won the biggest Powerball jackpot in history. Her two payment options were: 1) receive $35 million paid each year for 30 years (the first annual installment is paid immediately, with the next 29 payments made annually) or 2) take a lump sum payment of $371 million also paid immediately).

If the discount rate used by the Powerball Lottery to determine the annuity payment is 4.5%, what is the present value of the 30 annual $35 million/yr payment option?

II-Gloria MacKenzie, and 84 year old Florida woman, won the biggest Powerball jackpot in history. Her two payment options were: 1) receive $35 million paid each year for 30 years (the first annual installment is paid immediately, with the next 29 payments made annually) or 2) take a lump sum payment of $371 million also paid immediately).

If the discount rate used by the Powerball Lottery to determine the annuity payment is 4.5%, what is the present value of the last annual payment?



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