A state lotto has a prize that pays 1500 each week for 40 ye

A state lotto has a prize that pays $1,500 each week for 40 years. Find the total value of the prize: If the state can cam 8% interest on investments, how much money will they need to put into an account now to cover the weekly prize payments? Reminder:: There arc 52 weeks in a year.

Solution

Assuming 52 weeks in a year.

Total prize= 1500 * number of weeks in 40 yrs

= 1500* 40*52 = 3120000 dollars

If state can earn 8 % per year,

means it can earn around 8/52 % per week

To cover weekly prize of 1500, It should invest x amount, then

(x) * (8/52)*(1/100) = 1500

x = 975000 dollars