After getting his foot ran over by a commercial truck, Willy decided to call the "Hammer" whose law firm specializes in negotiating settlements for personal injury accidents. After tense negotiations with the insurance company, the Hammer informed Willy that he has negotiated a settlement that consists of $500,000 to be paid immediately, $1 million to be paid in exactly one year, plus 5 years of monthly payments of $10,000, with the first of the monthly payments to be made exactly 18 months from now. If the discount rate embedded in the settlement negotiations was 4.8 percent APR, compounded monthly. 

What is the present value (i.e., the value as of today) of the settlement agreement?

Answer rating: 100% (QA)

To calculate the present value of the settlement agreement we need to find the pr... View the full answer