A lottery winner wins the One Million Dollar Prize. After winning, she finds out that the payments are actually made annually over the next 15 years in installments of $50,000 each for each of the first 10 years, and $100,000 each for each of the next 5 years. What is the value of the prize today, if ROI is 9%

Total PV= $790,228.23

Explanation:

Giving the following information:

Annual payment= $50,000

Number of periods= 10 years

Annual payment= $100,000

Number of periods= 5 years

Discount rate= 9% = 0.09

First, we need to calculate the future value of each annual payment:

FV= {A*[(1+i)^n-1]}/i

A= annual paymeny

First 10 years:

FV= {50,000*[(1.09^10) - 1]} / 0.09

FV= $759,646.49

Next 5 years:

FV= {100,000*[(1.09^5) - 1]} / 0.09

FV= $1,709,582.17

Now, the present value of the prize:

PV= FV/(1+i)^n

First 10 years:

PV= 759,646.49/(1.09^10)

PV= $320,882.89

Next 5 years:

PV= 1,709,582.17/(1.09^15)

PV= 469,345.34  

Total PV= $790,228.23

month 1 start amount =$3287.90 interest=(3287.90x0.0145/12)3.97 total to pay=$3291.81 paid =$1200 balance =$2,091.87

month 2 starting amount= $2,091.87 interest =$25.28 total to pay =$2117.15 paid =$1200 balance $917.15

month 3 starting amount =$917.15 interest =$11.08 total to pay =$928.23 paid =$928.23 balance =$0 total to pay 1200+1200+928.23 = $3328.23 it will take 3 months to pay a total of $3328.23

the correct answer is economics is a game without winners or losers.

unlike sports or games economic is a game without losers or winner rather it is a game where everyone wins. parties of business doing businesses exchange money with each other and hence exchange is done on the basis of goods. one party takes the goods and other sales it so there is winner on both sides. each party values more highly the good it gets than the good it gives up. both sides exchange only because both intend to increase their value. so there is no concept of lose or win.