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Business, 03.06.2020 13:21 nathand200127

You just won a lottery. The terms of the lottery are such that you will receive twenty equal annual payments of $400,000. You will receive your first payment of $400,000 three years from today. The lottery authorities use a discount rate of 5 percent per year with annual compounding. You have the option of receiving a lump sum amount today, instead of the aforementioned payments. If you choose the lump sum amount, how much will that amount be?

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