Answer:
Total current value is $18,982,680
Explanation:
Given data:
Price of lottery is $62 million
discount rate is 14%
received amount in 20 year is $2.8 million
lump sum payment after 20 year is $6 million
PVAF value for 20 year and 14 % is 6.6231 [ from PVAF table ]
present value of $2.8 million for 20 year = 2800000 * 6.6231 = $18,544,680
Present value of $6 million at end of 20 year is = 6 000000 * PVF (20 year , 14%)
from table PVF value for 20 year and 14% is 0.073
present value = 6000000 * 0.073 = 438000
total current value = 18,544,680 + 438000 = $18,982,680
