Many people have reliable source of future income such as a structured settlement from a lawsuit. JG

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Question:

Many people have reliable source of future income such as a structured settlement from a lawsuit. JG Wentworth is a company that lets people trade that future income for a lump sum of cash today.

Suppose your friend Riley has a structured settlement where he will get $15,000 in two years (2024) and $30,000 in six years (2028). He sees this commercial for people who “need cash now” and the company offers him $24,312 today for in exchange for his settlement payments.

He asks you for advice and you say “don’t accept the settlement because the present value is _____ than $24,312 as long as you use a discount rate below ____%.”

a. more; 10%

b. less; 10%

c. more; 15%

d. less; 15%