The state lotterys million-dollar pay-out provides for 12


The state lottery's million-dollar pay-out provides for $1.2 million to be paid over 20 installments of $60,000 per payment. The first $60,000 payment is made immediately, and the 19 remaining $60,000 payments occur at the end of each of the next 19 years. A) If 11 percent is the appropriate discount rate what is the present value of this stream of cash flows? B) If 22% is the appropriate discount rate, what is the present value of the cash flow?

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Financial Management: The state lotterys million-dollar pay-out provides for 12
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