Carolyn Fields Has Just Won the State Lottery Present Value of $1

question 111

Essay

Carolyn Fields has just won the state lottery.The state offers the following three payout options for after-tax prize money:
1.$50,000 per year at the end of each of the next six years
2.$300,000 (lump sum)now
3.$400,000 (lump sum)six years from now
Calculate the present value of each scenario using an 8% annual discount rate.Round to nearest whole dollar.
Present value of an ordinary annuity of $1:
$$\begin{array} { | c | r | r | r | } \hline & { 7 \% } & { 8 \% } & { 9 \% } \\\hline 1 & 0.935 & 0.926 & 0.917 \\\hline 2 & 1.808 & 1.783 & 1.759 \\\hline 3 & 2.624 & 2.577 & 2.531 \\\hline 4 & 3.387 & 3.312 & 3.240 \\\hline 5 & 4.100 & 3.993 & 3.890 \\\hline 6 & 4.767 & 4.623 & 4.486 \\\hline\end{array}$$ Present value of $1:
$$\begin{array} { | c | r | r | r | } \hline & { 7 \% } & { 8 \% } &{ 9 \% } \\\hline 1 & 0.935 & 0.926 & 0.917 \\\hline 2 & 0.873 & 0.857 & 0.842 \\\hline 3 & 0.816 & 0.794 & 0.772 \\\hline 4 & 0.763 & 0.735 & 0.708 \\\hline 5 & 0.713 & 0.681 & 0.650 \\\hline 6 & 0.666 & 0.630 & 0.596 \\\hline\end{array}$$

---

Definitions:

Increasing Fussiness

A gradual increase in irritability or restlessness, often observed in infants as a response to discomfort or unmet needs.

Autism Spectrum

A range of neural development disorders characterized by challenges with social skills, repetitive behaviors, speech, and nonverbal communication, each person with autism can have unique strengths and challenges.

Neurobiological Nature

The characteristics and functions of an organism as determined by the biological and neurological processes.

Family Concordance

Family Concordance indicates the degree to which family members share similar attributes, behaviors, or illnesses, highlighting genetic or environmental influences.