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A lottery offers the chance to win a prize of receiving payments forever starting with $200...

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Advance Math

A lottery offers the chance to win a prize of receiving paymentsforever starting with $200 for the first payment followed by eachconsecutive payment increasing by $250 until the payment sizereaches $700. If you receive a payment every quarter, with thefirst in one quarter and interest is earned at j4 = 5%,what amount must the lottery have in the account today to fund theprize?

Answer & Explanation Solved by verified expert
3.7 Ratings (563 Votes)
Firstly following are the payments without interest addedthat need to be made by the lotteryPayment 1 200Payment 2 200250 450Payment 3 450250 700This payment of 700 needs to be made forever Hence    See Answer
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