The Florida Lottery agrees to pay the winner 287000 at the e

The Florida Lottery agrees to pay the winner $287,000 at the end of each year for the next 20 years. What is the future value of this prize if each payment is put in an account earning 0.08?

Solution

Future value of annuity=Annuity[(1+rate)^time period-1]/rate

=$287000[(1.08)^20-1]/0.08

=$287000*45.7619643

which is equal to

=$13,133,683.75(Approx).