Answer: the worth of the prize today is $150000
Step-by-step explanation:
We would apply the formula for determining present annuity. It is expressed as
PV = R[1 - (1 + r)^- n]r
Where
PV represents the present value of the investment.
R represents the regular payments made(could be weekly, monthly)
r = represents interest rate/number of interval payments.
n represents the total number of payments made.
From the information given,
r = 0.07/12 = 0.0058
n = 150
Therefore,
PV = 1500[1 - (1 + 0.0058)^- 150]/0.0058
PV = 1500[1 - (1.0058)^- 150]/0.0058
PV = 1500[1 - 0.42]/0.0058
PV = 1500[0.58]/0.0058
PV = 1500 × 100
PV = $150000
Answer:
$149,676.91
Step-by-step explanation:
A = P(1+r/n)ⁿt
Principal = $1500
r=7% = 7/100 = 0.07
