Question: The state lottery s million dollar payout provides for 1 million to
The state lottery’s million-dollar payout provides for $1 million to be paid over the course of 19 years in amounts of $50,000. The first $50,000 payment is made immediately, and the 19 remaining $50,000 payments occur at the end of each of the next 19 years. If 10 percent is the discount rate, what is the present value of this stream of cash flows? If 20 percent is the discount rate, what is the present value of the cash flows?
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