Homework Help: Math

Posted by Nick on Sunday, December 12, 2010 at 6:35pm.

A lottery prize worth $1,000,000 is awarded in payments of $10,000 five times a year for 20 years. Suppose the money is worth 20% compounded five times per year.

What is the formula used to find the present value of the prize?

Math - Reiny, Sunday, December 12, 2010 at 7:37pm
i = .20/5 = .04
n = 20x5 = 100

PV = 10 000(1 - 1.04^-100)/.04
= 245 049.99

20% interest!!! Wow, what fantasy place is this?

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