# Winners of the Georgia lotto drawing are given the choice of receiving the winning amount divided...

Winners of the Georgia lotto drawing are given the choice of receiving the winning amount divided equally over 21 years or as a lump sum cash option amount. The cash option amount is determined by discounting the annual winning payment at 8% over 21 years. This week the lottery is worth $1 million to a single winner. What would the cash option payout be? ## Lottery Winnings: Most lotteries pay out their prizes in annual installments over a long period of time. For that reason, the value of the winnings is usually different from the advertised value. ## Answer and Explanation: 1 Become a Study.com member to unlock this answer! Let, • PMT = periodic payment, • n = number of periods, • r = interest rate. We will assume that the$1 mil is the annual payment. The present value of the... How to Calculate the Present Value of an Annuity

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Chapter 8 / Lesson 3
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Learn how to find present value of annuity using the formula and see its derivation. Study its examples and see a difference between Ordinary Annuity and Annuity Due.