Problem:
The State lottery's million dollar payout provides for 1.4 million to be paid in 25 installments of $56,000 per payment. The forst $56,000 payment is made immediately, and the 24 remaining $56,000 payments occur at the end of each of the next 24 years. If 7 percent is the discounted rate, what is the present value of this annuity due is?
Required:
Question: If 14 percent is the discount rate, what is the present value of the cash flows?
Note: Be sure to show how you arrived at your answer.