This is the problem from the book:
A winner in a lottery can receive 50.000kr(swedish currency) every month for 25 years. The winner wants to know what the prise money is worth today.
a) What monthly interest rate is equivalent of a yearly interest rate of 4%?
b) What is the now-value for the whole prise if we count with a yearly interest rate of 4%?
a) was easy; it's just to take , which gives the monthly interest rate of 0.33%
b) on the other hand was difficult. I did this calculation to get the now-value.
The correct answer however, acording to the aswers section, is that the now-value is approximately 9.600.000 kr.
What is a now-value? I must obviously have a gross misunderstanding of the word.