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Maths Question HELP

DominicKid · 2013-12-01 14:49:29

John won a top prize and has two options: receive €1,000 at the end of every month for the next 20 years or take a lump sum now if AER is 8%, what is the minimum amount he should accept as a lump sum.

01-12-2013 2:49pm

#1

DominicKid

Closed Accounts Posts: 497 ✭✭

Join Date: January 2012

Posts: 439

John won a top prize and has two options:
receive €1,000 at the end of every month for the next 20 years

or

take a lump sum now

if AER is 8%, what is the minimum amount he should accept as a lump sum.

0

Comments

#2 01-12-2013 10:51pm

Yakuza

Registered Users, Registered Users 2 Posts: 5,141 ✭✭✭

Join Date: November 1999

Posts: 5008

I'm not doing the question for you, but I'll help phrase it another way to make it a bit easier:
If the AER is 8%, what is the equivalent monthly rate?
Using that rate, what is the present value of 240 payments (in arrears) of €1000?

0