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| Teaching Since: | May 2017 |
| Last Sign in: | 408 Weeks Ago, 2 Days Ago |
| Questions Answered: | 66690 |
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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Present Value. A lottery pays a winner $1 million a year for 20 years (starting in year 1). What is the present value of this sum at an interest rate of 8 percent? You can do this by hand (not recommended) or in an Excel spreadsheet. Here is how: Enter 1 in cells A1 through A20. In cell C3, enter @NPV(.08, A1:A20) and press enter. This will give you the result. What happens to the present value of the lottery if the interest rate falls to 5 percent? (Related to Application 2 on page 258.)
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