John Long has just learned he has won a $508,300 prize in the lottery. The...
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Accounting
John Long has just learned he has won a $ prize in the lottery. The lottery has given him two options for receiving the payments. If John takes all the money today, the state and federal governments will deduct taxes at a rate of immediately. Alternatively, the lottery offers John a payout of equal payments of $ with the first payment occurring when John turns in the winning ticket. John will be taxed on each of these payments at a rate of
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Compute the present value of the cash flows for lump sum payout. Round answer to decimal places, eg
Lump sum payout $
Assuming John can earn an rate of return compounded annually on any money invested during this period, compute the present value of the cash flows for annuity payout. Round factor values to decimal places, eg and final answer to decimal places, eg
Present value of annuity payout $
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