Question

10. In October 2018, someone in South Carolina won the largest lottery of nearly $1.6 billion. If the winner takes the payout option instead of a lump sum, the yearly payments are set so that you get an additional 5% more each year until you reach your total winnings. The first payment would have been $24,082,304. What would the payment be in the second year? What about the year after that?

Answer 1

Answer:

• year 2: $25,286,419.20
• year 3: $26,550,740.16

Step-by-step explanation:

When 5% of a number is added to the number, the result is 1.05 times the original number: 1 + .05 = 1.05.

Each year, the payment is the previous payment multiplied by 1.05.

The second year's payment is ...

  $24,082,304.00 × 1.05 = $25,286,419.20

The third year's payment is ...

  $25,286,419.20 × 1.05 = $26,550,740.16

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Comment on this payment schedule

The total will be 1.6 billion after the 30th payment. That payment will be about $99,126,029.