Suppose the Winner of a $15,000,000 Sweepstakes Will Be Paid

question 154

Multiple Choice

Suppose the winner of a $15,000,000 sweepstakes will be paid $500,000 per year for 30 years,starting a year from now.The money earns 5% interest per year.The present value of the winnings is Compute the present value using the formula for the nth partial sum of a geometric series.Round your answer to two decimal places. ​

• A)$36,941,323.46
• B)$9,464,644.76
• C)$24,627,548.97
• D)$5,189,829.02
• E)$7,686,225.51

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Definitions:

Net Present Value

A calculation used to assess the profitability of an investment, considering the difference between the present value of cash inflows and outflows over a period of time.

Internal Rate of Return

A financial metric used to evaluate the profitability of potential investments, calculated as the discount rate that makes the net present value of all cash flows from a particular project equal to zero.

Net Present Value

An economic metric that evaluates the gap between the present value of cash inflows and outflows across a designated period.

Cash Flow Estimates

Projected amounts of cash inflows and outflows over a certain period that help businesses plan for investments, operational needs, and debt repayment.