You just won the grand prize in a national writing contest! As your prize,you will receive $2,000 a month for ten years.If you can earn 7 percent on your money,what is this prize worth to you today?

Question

Quizplus · Accepted Answer

This prize's present value can be calculated using the formula for the present value of an annuity: PV = PMT × [(1 - (1 + r)^-n) / r], where PMT is the monthly payment ($2,000), r is the monthly interest rate (7% annually, so 0.07/12 monthly), and n is the total number of payments (10 years × 12 months = 120 payments). Plugging these values into the formula gives a present value of approximately $172,252.71.

You Just Won the Grand Prize in a National Writing