You have just won the lottery and will receive $1,000,000 in one year. you will receive payments for 25 years and the payments will increase by 2 percent per year. if the appropriate discount rate is 6 percent, what is the present value of your winnings? (do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)

PV=$15,500,000

Explanation:

To know the present value (PV) of the winnings we use the following formula:

PV= (F1/(i-g))*FC

F1= Payment in t=1 ( In this case it is $1,000,000 because you will receive it in one year)

i= interest rate (or discount rate: 6%)

g= growth rate (2%)

n= number of periods (25)

FC= 1-[(1+g)/(1+i)]^(n)

We replace in the formula:

FC= 1-[(1+2%)/(1+6%)]^(25)

FC=1-[0.382]

FC= 0.618

Rounded to 2 decimal places

FC= 0.62

PV=(1,000,000/(6%-2%))* 0.62

PV=(25,000,000)*0.62

PV=$15,500,000

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

a loan? that’s my guess, anywho.