Calculation Of Present Value Of Annuity Due For A Lottery Won

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Question

Assume that you just won $50 million in the All States lottery, and hence the lottery will pay you 20 annual payments of $2.5 million each beginning immediately. If the rate of return on securities of similar risk to the lottery earnings (e.g., the rate on 20-year U.S. Treasury bonds) is 6 percent, what is the present value of your winnings?

Summary

The question belongs to Finance and it discusses about calculation of present value of annuity due for a lottery won.

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