M&B3 3rd Edition by Dean Croushore

Exercise 11

You have just won a $25 million lottery prize, which pays you $1 million (tax-free) every year for the next 25 years. Have you really won $25 million What have you won if the rate of discount is 5 percent ( Note: You will get your fi rst $1 million payment today and your last $1 million payment 24 years from now.)