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A. Q. Joe won a lottery jackpot that will pay him $12,000 each year for the next ten years. If the market interest rates are currently 12%, how much does the lottery have to invest today to pay out this prize to Joe over the next ten years?

A.
If prize = (principal) x (rate) x (time)
prize = (12,000) x (0.12) x (10)
prize = (12,000) x (1.2)
prize = $144,000 total invested by the lottery to pay our winnings of 12,000 for the next ten
years.

B. Q. Mary Just deposited $33,000 in an account paying 10% interest. She plans to leave the money in this account for seven years. How much will she have in the account at the end of the seventh year?

A.
Traditional method of finding the Future Value:

FV end of year 1 = $33,000+0.10($33,000) = $36,300
FV end of year 2 = $33,000+0.10($36,300) = $39,930
FV end of year 3 = $33,000+0.10($39,930) = $43,923
FV end of year 4 = $33,000+0.10($43,923) = $48,315.30
FV end of year 5 = $33,000+0.10($48,315.30) =......

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Approximate Word Count: 299
Approximate Pages: 2 (250 words per double-spaced page)

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