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Calculate the present value of option b

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Reference no: EM132627192

You just won the Power Ball Lottery worth $350,000,000.

Upon reading the fine print you learn, that you have two options:

Option A: take the cash value of $35 million today (before taxes)

Option B: The winner is guaranteed to receive 30 graduated payments over 29 years; the first payment is made today. These payments will increase by 3% per year until the final payment. The first payment, received today, equals $11,500,000.

Assuming a required rate of return of 5%, calculate the present value of option B.

Reference no: EM132627192

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