Question

Please help me solve for the present value of each payout

Congratulations! You've won a state lotto! The state lottery offers you the following (after-tax) payout options: (Click the icon to view the payout options.) (Click the icon to view the present value factor table.) (Click the icon to view the present value annuity factor table.) 5 (Click the icon to view the future value factor table.) (Click the icon to view the future value annuity factor table.) Requirement Assuming that y þarest whole dollar.) Data Table Calculate the pre Option #1: Option #1: $13,000,000 five years from now Option #2: $2,100,000 at the end of each year for the next five years Option #3: $10,500,000 four years from now Print Done

rate of interest 6%

Answer 1

Option #1: $13,000,000 five years from now: Present Value = Future Cash Inflow x Present Value of 1$ for Period 5, 6% rate = $13,000,000 x 0.747 = $ 9,711,000.00 Option #2: $2,100,000 at the end of each year for the next five years: Present Value = Future Annual Cash Inflow x Present Value of Annuity for Period 5, 6% rate = $2,100,000 x 4.212 = $ 8,845,200.00 Option #3: $10,500,000 four years from now: Present Value = Future Cash Inflow x Present Value of 1$ for Period 4, 6% rate = $10,500,000 x 0.792 = $ 8,316,000.00