Problema 5 year girl was given a lottery ticket for her, Ask an Expert

Finance

Problem:

A 5 year girl was given a lottery ticket for her recent birthday. The ticket was the grand prize winner and is suppose to pay $80,000 per year after taxes, for 20 years. The state sued, however, and won the case arguing that it would pay the prize as agreed, but it would not begin payment until the girl reaches age of 18 in exactly 13 years.

Required:

Question: If the appropriate discount rate is 6% annually, what is present value of the girl's fortune?

Note: Please show how you came up with the solution.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91163404

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