Question:

1. Joe won a lottery jackpot that will pay him $12,000 each year for the next ten years. If the market interest rates are currently 12%, how much does the lottery have to invest today to pay out this prize to Joe over the next ten years?
   (This way would pay the lottery prize and preserves the principal)
   Using Excel we get

   Year	1	2	3	4	5	6	7	8	9	10
   Present Flow	12000	10714.29	9566.327	8541.363	7626.217	6809.122	6079.573	5428.191	4846.599	4327.32
   Future Flow	12000	12000	12000	12000	12000	12000	12000	12000	12000	12000
   PV	$75,939

   which means that \(P=\\)75,939$. In other words, if the lottery invests this amount in a bond, at the market rate, then they’ll get $12,000 annually (This way the principal is not preserved).
2. Mary just deposited $33,000 in an account paying 10% interest. She plans to leave the money in this account for seven years. How much will she have in the account at the end of the seventh year?
3. Mary and Joe would like to save up $10,000 by the end of three years from now to buy new furniture for their home. They currently have $2500 in a savings account set aside for the furniture. They would like to make equal year end deposits to this savings account to pay for the furniture when they purchase it three years from now. Assuming that this account pays 8% interest, how much should the year end payments be?

Price: $2.99

Solution: The downloadable solution consists of 2 pages
Deliverable: Word Document