Problem:
The lottery's million dollar payout provides 1 million to be paid over 19 years in 20 payments of $50,000. The first $50,000 is paid immediately, and the remaining 19 $50,000 dollar payments occur at the end of each of the next 19 years.
Required:
Question: If 10 percent is the appropriate discount rate, what is the present value of this stream of cash flows? If 20% is the appropriate discount rate, what is the present value of the cash flows?
Note: Explain in detail.