After being seriously injured in an automobile accident, Joseph Andrews took his case to court and today was awarded an annual payment of $20,000 payable with the first payment due at the end of this year. Mr. Andrews would like to trade his annual award in for a lump sum today so he can invest it himself. Since the insurance company actuarial tables indicate that he has a life expectancy of another 9 years, if he and the company can agree to that life expectancy and to a rate of return of 5%, how much can he expect to receive as a lump sum payment today?

Answer rating: 100% (QA)

The present value of an annuity can be calculated using the present ... View the full answer