Question

You have just won ​$20,000 in the state​ lottery, which promises to pay you ​$1,000​ (tax free) every year for the next twenty years. the interest rate is​ 5%. in​ reality, you receive the first payment of ​$1,000​ today, which is worth ​$

Answer 1

The current value of the payment which is $1000 will be:
A=P(1+r/100)^-n
P=1000
r=5 %
n=1
A=1000(1+5/100)^-1
A=1000/1.05
A=$952.38
The first payments of $1000 is worth $952.38 today. The value of the second $1000 is worth:
A=1000(1+0.05)^-2=907.02 
today