Tuesday 6 March 2018

You’ve just won the lottery which promises to pay you $5,000 per month for the next 30 years, starting in one month


You’ve just won the lottery which promises to pay you $5,000 per month for the next 30 years, starting in one month. The lottery company is require to buy US Treasury securities to guarantee that it can meet its obligation to you. If Treasury securities earned 5% APR compounded monthly, how much would the lottery company have to invest today to cover its obligation?

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