A financial company advertises on television that they will pay you $55,000 now in exchange for annual payments of $8,500 that you
are expected to receive for a legal settlement over the next 10 years. You estimate the time
value of money at 7 percent
(a) Calculate the present value of the annual payments. Use Exhibit 1-D. (Round time value factor to 3 decimal places and final
answer to the nearest whole number.)
Present value
(b) Would you accept this offer?
No
Yes
Pro
of 10
Mout