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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

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After an injury, you win a lawsuit judgment of $1707 per month start.pdf

  • 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