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Advanced Engineering Mathematics
10th Edition
ISBN: 9780470458365
Author: Erwin Kreyszig
Publisher: Wiley, John & Sons, Incorporated
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![**Example Problem: Present Value Calculation**
Suppose a state lottery prize of **$4 million** is to be paid in **5 payments** of **$800,000** each at the end of each of the next **5 years**. If money is worth **9%**, compounded annually, what is the present value of the prize?
(Round your answer to the nearest cent.)
**Solution:**
- Input field with answer: **$492,3596.65**
In this exercise, calculate the present value of an annuity. The prize will be paid in installments, and you need to discount these future cash flows to their present value using a discount rate of 9%, compounded annually.](https://content.bartleby.com/qna-images/question/eafecdb5-6a00-4b1b-9bab-c3b276507665/9024b57d-9095-4594-9b49-14c3f40dca53/jhxhnu_thumbnail.png)
Transcribed Image Text:**Example Problem: Present Value Calculation**
Suppose a state lottery prize of **$4 million** is to be paid in **5 payments** of **$800,000** each at the end of each of the next **5 years**. If money is worth **9%**, compounded annually, what is the present value of the prize?
(Round your answer to the nearest cent.)
**Solution:**
- Input field with answer: **$492,3596.65**
In this exercise, calculate the present value of an annuity. The prize will be paid in installments, and you need to discount these future cash flows to their present value using a discount rate of 9%, compounded annually.
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