Answer:
$102,677.20
Step-by-step explanation:
The present value of an annuity due is determined by the following expression:
[tex]PV = P+P*(\frac{1-(1+r)^{-n+1}}{r})[/tex]
Where 'P' is the amount of each payment received, 'r' is the interest rate on the investment and 'n' is the number of yearly payments.
With 20 annual payments of $10,000 at a rate of 8.5%, the present value is:
[tex]PV = 10,000+10,000*(\frac{1-(1+0.085)^{-20+1}}{0.085})\\PV = 10,000+ 10,000*(9.26772)\\PV=\$102,677.20[/tex]
The present value of your winnings is $102,677.20.
