You were awarded $1,707 per month for 39 months from a lawsuit settlement starting next month. To calculate the current lump sum value of those future payments, with an interest rate of 5.2% APR compounded monthly, use the present value of an annuity formula. Plugging the values into the formula results in a current equivalent lump sum of $61,130.

1. After an injury, you win a lawsuit judgment of $1707 per month starting next month for a total of
39 months. If the interest rate is 5.2% APR compounded monthly, what is the current equivalent
lump sum of your settlement? Give your anser to the nearest dollar.
Solution
Present value of annuity = P×[1-(1÷(1+r)^n)]÷r
r is interest rate per period
P is payment per period
n is number of payments
= $1,707×[1-(1÷(1+(5.20%÷12))^39)]÷(5.20%÷12)
= $61,130