What is the present value of your prize money, Finance Basics

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What is the present value of your prize money

Problem

You won the 'set for life' lottery which promises to pay you $1,000 per month forever starting today. At the end of January of each year, you collect a bonus payment of $1,000 to make it easier to pay credit card bills from the holidays. To make calculations easier suppose that today is Jan 1st. Your discount rate is 10% p.a. What is the present value of your prize money?

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