Juan Has Just Received a Prize Which Entitles Him to Receive

question 150

Multiple Choice

Juan has just received a prize which entitles him to receive annual payments of $10,000 at the end of each year for the next 10 years. He would like to sell the rights to the prize money to a financial institution, so that he can have the cash now. In order to estimate the present value of the prize, he will use a discount rate of 5%. What is the present value of the prize?

• A)$61,450
• B)$71,080.
• C)$77,220
• D)$71,080

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