You are in talks to settle a potential lawsuit. The defendant has offered to make annual payments of $23,000, $29,000, $56,000,

Question

3 years ago

7

You are in talks to settle a potential lawsuit. The defendant has offered to make annual payments of $23,000, $29,000, $56,000,

and $84,000 to you each year over the next four years, respectively. All payments will be made at the end of the year. If the appropriate interest rate is 4.5 percent, what is the value of the settlement offer today

Business

1 answer:

taurus [48] · Answer 1 · 2022-08-11T14:06:36+03:00

Answer:

$168,078

Explanation:

Calculation for what is the value of the settlement offer today

Value of the settlement offer today= [$23,000 / (1 + 0.045)] + [$29,000 / (1 + 0.045)^2] + [$56,000 / (1 + 0.045)^3] + [$84,000 / (1 + 0.045)^4]

Value of the settlement offer today=$22,010+ $26,556+$49,073+$70,439

Value of the settlement offer today=$168,078

Therefore the value of the settlement offer today will be $168,078