Assume you win a $1,000,000 contest, and the prize will be paid in equal 10 equal installments over 10 years. The payments will be made on June 30 of each year beginning with June 30 this year. If the current rate of interest is 7 percent, what is the present value of your winnings? Use the information in the table to determine your answer.
Present value of an annuity of $1 at compound interest:
Periods123456789104.0%0.961541.886092.775093.629904.451825.242146.002056.732747.435338.110904.5%0.956941.872672.748963.587534.389985.157875.892706.595897.268797.912725.0%0.952381.859412.723253.545954.329485.075695.786376.463217.107827.721735.5%0.947871.846322.697933.505154.270284.995535.682976.334576.952207.537636.0%0.943401.833392.673013.465114.212364.917325.582386.209796.801697.360096.5%0.938971.820632.648483.425804.155684.841015.484526.088756.656107.188837.0%0.934581.808022.624323.387214.100204.766545.389295.971306.515237.0235810.%0.909091.735542.486853.169873.790794.355264.868425.334935.759026.1445711.0%0.900901.712522.443713.102453.695904.230544.712205.146125.537055.8892312.0%0.892861.690052.401833.037353.604784.111414.563764.967645.328255.6502213.0%0.884961.668102.361152.974473.517233.997554.422614.798775.131665.42624
Economic Efficiency
The optimal allocation of resources to maximize the production of goods and services.
Marginal Happiness
The additional satisfaction or utility that a person gains from receiving or consuming one more unit of a good or service.
Sequential Stages
Sequential stages are the consecutive phases or steps in a process or system, where each stage follows the previous one in an orderly progression.
Moral Development
A process through which individuals evolve their understanding of what is right and wrong, often described through stages by psychologists.