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Math Help - Present Value

  1. #1
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    Present Value

    You have just won the $1000 per week for life jackpot. A fortune teller had predicted this for you a week ago. The fortune teller also said you will live to the age of 90. You are currently 20 years old. What is the present value of your winnings, assuming a 5% APR compounded semi-annually discount rate?

    I am not quite sure but here is my solution.
    Converting the APR from semi-annually to weekly, I got 0.095016699%.
    Payment = 1000
    Number of periods is 70x52=3640
    Future Value = 3640000

    Using a financial calculator, I get that present value = 1134019.91.

    Is this correct?
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  2. #2
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    Quote Originally Posted by Shapeshift View Post
    You have just won the $1000 per week for life jackpot. A fortune teller had predicted this for you a week ago. The fortune teller also said you will live to the age of 90. You are currently 20 years old. What is the present value of your winnings, assuming a 5% APR compounded semi-annually discount rate?

    I am not quite sure but here is my solution.
    Converting the APR from semi-annually to weekly, I got 0.095016699%.
    Payment = 1000
    Number of periods is 70x52=3640
    Future Value = 3640000

    Using a financial calculator, I get that present value = 1134019.91.

    Is this correct?
    Future value is 0, not 3640000; no need for FV anyway.

    You must have entered something wrong in calculator: PV is 1,019,267.94

    By formula:
    1000(1 - 1/1.0009501667^3640) / .0009501667 = 1,019,267.94
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  3. #3
    Junior Member
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    Ok once I switched future value to 0, that is the answer I got. Thanks!!!
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