Svetlana won $1,600,000 in a contest, to be paid in twenty $80,000 payments at yearly intervals,...

 

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Svetlana won $1,600,000 in a contest, to be paid in twenty $80,000 payments at yearly intervals, the first payment paid at the time of the contest. (Of course, the present value of her winnings is less than $1,600,000.) Svetlana decided to keep X each year to spend and deposit the remaining $80,000 - X into an account earning an annual effective interest rate of 8%. She chose the value X to be as large as possible so that, at the moment of the 20th deposit, the account would have grown to such a size that it would provide Svetlana and her heirs at least X per year in interest forever. Find X. (Round your answer to the nearest cent.) Svetlana won $1,600,000 in a contest, to be paid in twenty $80,000 payments at yearly intervals, the first payment paid at the time of the contest. (Of course, the present value of her winnings is less than $1,600,000.) Svetlana decided to keep X each year to spend and deposit the remaining $80,000 - X into an account earning an annual effective interest rate of 8%. She chose the value X to be as large as possible so that, at the moment of the 20th deposit, the account would have grown to such a size that it would provide Svetlana and her heirs at least X per year in interest forever. Find X. (Round your answer to the nearest cent.)

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Heres how to find the value of X Step 1 Calculate the present value of the winnings Since the paymen... View the full answer