Present Value of an Annuity

On January 1, you win $1,360,000 in the state lottery. The $1,360,000 prize will be paid in equal installments of $170,000 over 8 years. The payments will be made on December 31 of each year, beginning on December 31. If the current interest rate is 6%, determine the present value of your winnings. Use the present value tables in Exhibit 7. Round to the nearest whole dollar.

Exhibit 7 Present Value of an Annuity of $1 at Compound Interest Periods 4% 4%1% 5% 57% 6 % 6%% 0.96154 0.95694 0.95238 0.94787 0.94340 0.93897 1.886091.87267 1.85941 184632 1.83339 1.82063 2.77509 2.74896 2.72325 2.69793 2.67301 2.64848 3.62990 3.58753 3.54595 3.50515 3.46511 342580 445182 4.38998 4.32948 4.27028 4.21236 4.15568 5.24214 5.15787 5.075694.99553 4.91732 4.84101 6.00205 5.89270 5.78637 5.68297 5.58238 5.48452 6.73274 6.595896.46321 6.33457 6.209796.08875 7.435337268797.10782 6.95220 6.801696.65610 8.11090 7.91272 7.721737537637.360097.18883 7% 10% 11% 0.93458 0.909090.90090 1.80802 1.73554 1.71252 2.62432 248685244371 3.38721 3.16987 3.10245 4.10020 3.79079 3.69590 4.76654 4.35526 4.23054 5.389294.86842 4.71220 5.97130 5.33493 5.14612 6.51523 5.75902 5.53705 7.02358 6.14457 5.88923 12% 13% 0.89286 0.88496 1.69005 1.66810 240183 236115 3.03735 2.97447 3.60478351723 4.11141 3.99755 4.56376 442261 4.96764 4.79677 5.32825 5.13166 5.65022 542624 10