Jackson just received a settlement in a lawsuit that promises $230 in 7 years. The lawsuit will also pay him a second amount of $620 that will be received in 12 years. Jackson, being profligate, wants instead to spend the settlement money today. What is the present value of his settlement assuming the interest rate of 4.50%? $ INSTRUCTIONS: Place your answer in dollars and cents. DO NOT USE A DOLLAR SIGN OR A COMMA IN YOUR ANSWER. Work all calculations to at least four decimal points of accuracy. Solution Present value of first settlement of $230 in 7 years = $32.86 * PVIFA(4.5,7) = $32.86 * 5.8927=$193.63 Present value of second settlement of $620 in 12 years = $51.67 * PVIFA(4.5,12) = $51.67 * 9.1186 = $471.13.

1. Jackson just received a settlement in a lawsuit that promises $230 in 7 years. The lawsuit will
also pay him a second amount of $620 that will be received in 12 years. Jackson, being
profligate, wants instead to spend the settlement money today. What is the present value of his
settlement assuming the interest rate of 4.50%? $ INSTRUCTIONS: Place your answer in dollars
and cents. DO NOT USE A DOLLAR SIGN OR A COMMA IN YOUR ANSWER. Work all
calculations to at least four decimal points of accuracy.
Solution
Present value of first settlement of $230 in 7 years = $32.86 * PVIFA(4.5,7) = $32.86 *
5.8927=$193.63
Present value of second settlement of $620 in 12 years = $51.67 * PVIFA(4.5,12) = $51.67 *
9.1186 = $471.13