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You just won the $87 million Ultimate Lotto jackpot. Your winnings will be paid as $2,900,000 per year for the next 30 years. If the appropriate interest rate is 6.2 percent, what is the value of your windfall

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Answer:

Explanation:

In order to calculate the value of your windfall we would have to calculate the following formula:

Value of windall=P×[1-(1÷(1+r)^n)]÷r

According to the given data we have the following:

Interest rate per annum=6.20%

Number of years=  30

Number of compoundings per per annum=1

Payment per period (P)=$2,900,000

Therefore, Value of windall=$2,900,000×(1-(1÷(1+6.2%)^30))÷6.2%

Value of windall=$39,078,091.71

The value of your windfall is $39,078,091.71

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