You won a local lottery! Congratulations. You have been awarded a 41-payment, constant growth annuity. The...

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You won a local lottery! Congratulations. You have been awarded a 41-payment, constant growth annuity. The first payment is at Year O and is equal to $10,000. Each subsequent payment will be paid in 6 month intervals, with the final payment at Year 20. Further, payments will grow at a constant growth rate of 4 percent (payment 2 will be $10,000 x 1.04 $10,400, etc.). The appropriate discount rate for this constant growth annuity is a nominal annual rate of 6.5 percent, with monthly compounding. Given this information, determine the value, at Year O, of this constant growth annuity. = Enter your answer in dollars, rounded to the nearest whole dollar, with no punctuation. For example, if you answer is $15,222.54, enter "15223". You won a local lottery! Congratulations. You have been awarded a 41-payment, constant growth annuity. The first payment is at Year O and is equal to $10,000. Each subsequent payment will be paid in 6 month intervals, with the final payment at Year 20. Further, payments will grow at a constant growth rate of 4 percent (payment 2 will be $10,000 x 1.04 $10,400, etc.). The appropriate discount rate for this constant growth annuity is a nominal annual rate of 6.5 percent, with monthly compounding. Given this information, determine the value, at Year O, of this constant growth annuity. = Enter your answer in dollars, rounded to the nearest whole dollar, with no punctuation. For example, if you answer is $15,222.54, enter "15223".

Answer rating: 100% (QA)

Answer To calculate the value of the constant growth annuity we can use the formula for the present value of a growing perpetuity PV C r g where PV is ... View the full answer