Ask Question
BusinessBusiness
11 October, 20:53

You are in talks to settle a potential lawsuit. The defendant has offered to make annual payments of $35,000, $39,000, $80,000, and $120,000 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 5.7 percent, what is the value of the settlement offer today

+5
Answers (1)
  1. 11 October, 20:56
    0
    The value of the settlement today = $231,897.79

    Explanation:

    The value of the settlement today is the sum of the present value (PV) of cash inflows discounted at the discount rate of 5.7 %.

    Year PV

    1 35,000 * 1.057^ (-1) = 33112.58

    2 39,000 * 1.057^ (-2) = 34907.16

    3. 80,000 * 1.057^ (-3) = 67743.09

    4 120,000 * 1.057^ (-4) = 96134.94

    The Pv of the total cash in flow = 33,112.58 + 34,907.17 + 67,743.09 + 96,134.95 = 231,897.79

    The value of the settlement today = $231,897.79
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “You are in talks to settle a potential lawsuit. The defendant has offered to make annual payments of $35,000, $39,000, $80,000, and ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Markus Company's common stock sold for $3.50 per share at the end of this year. The company paid a common stock dividend of $0.63 per share this year.
Answers (1)
Mindy's credit card has an APR of 15%, calculated on the previous monthly balance, and Mindy makes a payment of $50 every month. Her credit card record for the last 7 months is shown in the table below. What were the finance charges in month 2?
Answers (2)
What percent of customers bought anything from the last catalog? 2. what was the average $ order size bought from the last catalog across all 96,551 customers? tuscany lifestyles?
Answers (1)
Cartoon caricatures of politicians that exaggerate certain characteristics can be persuasive due to their:
Answers (1)
Riverbed Company designated Jill Holland as petty cash custodian and established a petty cash fund of $236. The fund is reimbursed when the cash in the fund is at $31, which it is.
Answers (1)
New Questions in Business
Zwick Company bought 26,500 shares of the voting common stock of Handy Corporation in January 2018. In December, Handy announced $ 205,200 net income for 2018 and declared and paid a cash dividend of $ 6 per share on all 203,000 shares of its
Answers (1)
Movie studios use market research to reduce their risk of losses by hiring firms such as the National Research Group to conduct test screenings and tracking studies.
Answers (1)
The Silver Center (TSC) produces cups and platters. TSC purchases silver and other metals that are processed into silver alloy that is used to make platters and cups.
Answers (1)
In the united states today, what gives money its value?
Answers (2)
An employer has the right to monitor workers electronic communications if
Answers (1)
Home » Business » You are in talks to settle a potential lawsuit. The defendant has offered to make annual payments of $35,000, $39,000, $80,000, and $120,000 to you each year over the next four years, respectively. All payments will be made at the end of the year.
Sign Up Forgot Password?