The Florida lottery agrees to pay the winner $250,000 at the end of each year for the next 20 years. What is the future value of this lottery if you plan to put each payment in an account earning 9 percent?

Question

Quizplus · Accepted Answer

The future value of an annuity can be calculated using the formula FV = P * [((1 + r)^n - 1) / r], where P is the payment amount, r is the interest rate per period, and n is the number of periods. Plugging in the values ($250,000 for P, 9% or 0.09 for r, and 20 for n), the calculation gives a future value of approximately $12.79 million, making option B the correct answer.

The Florida Lottery Agrees to Pay the Winner $250,000 at the End