Thread: 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?

Originally Posted by Shapeshift

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

Ok once I switched future value to 0, that is the answer I got. Thanks!!!