You are negotiating for the terms of a legal settlement, and your opponent's attorney has presented you with the following alternative settlement offers:
a. $38,000 today in one lump sum.
b. $50,000 to be paid to you in five equal payments of $10,000 at the end of each of the next five years.
c. Five equal annual installments of $9,100 each, beginning today.
If your discount rate is 10%, what is the present value of each of the alternatives and which alternative would you choose?

Question

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The Answer of You are negotiating for the terms of a legal settlement, and your opponent's attorney has presented you with the following alternative settlement offers:
a. $38,000 today in one lump sum.
b. $50,000 to be paid to you in five equal payments of $10,000 at the end of each of the next five years.
c. Five equal annual installments of $9,100 each, beginning today.
If your discount rate is 10%, what is the present value of each of the alternatives and which alternative would you choose?

You Are Negotiating for the Terms of a Legal Settlement