Answer:
Givens
- The prize pays $900 each week for 25 years.
To find the total amount of money that this prize pays, we need to find the total number of weeks that represents 25 years, and then multiply that number with $900.
So, we know that 1 year has 52 weeks, so 52 weeks multiplied by 25 years is
This means there are 1300 weeks, and the prize pays $900 to each of them, so
Therefore, after 25 years, the prize will pay $1,170,000.
Now, if the state can earn 9% interest, the total interest amount would be
In this case, the principal must be the difference between $1,170,000, and the interest earned, as follows
The interest earned is $810,000. Now, the principal is
Therefore, the need to put into an account $360,000 to cover weekly prize payments.