Lotta Dough just won the state lottery and has elected to receive $50,000 per year for 20 years in the form of an annuity due.What is the present value of this stream of payments if money can earn 8 percent annual interest?
A)$579,139
B)$500,000
C)479,035
D)$530,180

Question

Quizplus · Accepted Answer

The present value of an annuity due can be calculated using the formula for the present value of an annuity due, which accounts for payments at the beginning of each period. The correct calculation results in a present value of approximately $530,180 when using an 8% annual interest rate.

Lotta Dough Just Won the State Lottery and Has Elected