Answer:
$43,294.77
Explanation:
Here is the full question used in answering this quetion :
You win a lottery that pays $10,000 each year for the next 5 years beginning next year. How much are your winnings worth today if the market interest rate is 5%?
Present value is the sum of discounted cash flows
PV can be calculated with a financial calculator
Cash flow in year 1 - 5 = $10,000
i = 5%
PV = $43,294.77
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
