CFA Practice Question

There are 410 practice questions for this study session.

CFA Practice Question

The state lottery you just won will make annual payments of $152,000 for the next twenty years. What is the present value of your prize at a discount rate of 8%?
A. $ 1,492,358.41
B. $ 1,523,323.25
C. $ 1,634,516.01
Explanation: To calculate the present value of a stream of payments, use the formula:

PV = Payment * (1 - (1 / (1 + R)N) / R
where: N = the number of periods (payments), R = the interest rate per period

User Contributed Comments 5

User Comment
vrabez What are steps for the annuity on a financial calculator?
malikhwa On BA11 PlUS
2nd (CLR WORK)
20 (N)
8(1/Y)
152000(PMT)
(CPT)(PV)
CFAlearner Typing that in I get $2,798,957.60 where am I going wrong?
enje Use CF

CF
C01 = 152000
F01=20
NPV
I=8 (down arrow) then CPT = 1492,358.41
Shaan23 STUPID STUPID....calculator was in BGN mode
You need to log in first to add your comment.