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 7 percent annual interest?
A) $566,780
B) $977,665
C) $500,000
D) $779,664

Question

Quizplus · Accepted Answer

The present value of an annuity due is calculated as the present value of an ordinary annuity multiplied by (1 + r), where r is the interest rate. In this case, the present value of the annuity due is $566,780.

Lotta Dough Just Won the State Lottery and Has Elected