You have just won a contest and are entitled to a lump sum payment of $63,160. However, you will not receive this payment for 30 years. To compute the present value of your prize, assuming a discount rate of 11%, we would need to calculate the present value of the future payment, which would be $63,160 discounted at 11% for 30 years.
a. Use the present value formula: PV = FV / (1 + r)ⁿ
b. Use a present value table to find the present value factor for 30 years at an 11% discount rate
c. Use a financial calculator or spreadsheet to calculate the present value
d. Seek the help of a financial advisor or accountant to calculate the present value