The lottery found out you learned how to calculate annuities during your undergraduate degree, and is now offering an option: $10,000 per year, plus $1500 each year starting in the second year, for 10 years.

1. How much is this worth at present? Consider interest to be 2%.
2. The lottery has come back with one final offer: $10000 at year 1, and 5% growth each following year, up to and including year 10. What is the present worth of this option? Interest is still 2%.

Answer rating: 100% (QA)

To calculate the present worth of each option we can use the formula for calculating the present val... View the full answer