Present and future value tables of $1 at 3% are presented below:

-Jose wants to cash in his winning lottery ticket. He can either receive five $5,000 annual payments starting today, or he can receive one lump-sum payment today based on a 3% annual interest rate. What would be the lump-sum payment?
A) $23,586.
B) $22,899.
C) $21,565.
D) $23,000.

Question

Present and future value tables of $1 at 3% are presented below:

-Jose wants to cash in his winning lottery ticket. He can either receive five $5,000 annual payments starting today, or he can receive one lump-sum payment today based on a 3% annual interest rate. What would be the lump-sum payment?
A) $23,586. 
B) $22,899. 
C) $21,565. 
D) $23,000.

Quizplus · Accepted Answer

PVAD = $5,000 × 4.71710* = $23,586
*PVAD of $1: n = 5; i = 3%

Present and Future Value Tables of $1 at 3% Are