Question
In: Finance
Joe was awarded some money as the result of a legal settlement.
Joe was awarded some money as the result of a legal settlement. He will be given $100,000 at the end of year 1 and $400,000 at the end of year 5. If the insurance company offers him a lump sum today, how much should that amount be, assuming the interest rate is 4%?
Solutions
Expert Solution
Present value=Cash flows*Present value of discounting factor(rate%,time period)
=100,000/1.04+400,000/1.04^5
which is equal to
=$424,924.69(Approx)
jeff jeffy answered 2 years agoRelated Solutions
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