The present value is the current value of the expected cash flows to be received in the future.
Here, the present value of the settlement is $6484.64
From the lawsuit settlement, the amount of $9,500 was received in 6 years and the annual interest rate is 7.75%.
Present value = A÷ (1+rt)
where A is the amount
r is the rate of interest
t is the time period
Here Amount = $9500
R= 7.75% i.e. 0.0775
T = 6 years
Thus,
Present Value (PV) = A÷ (1+rt)
= $9500 ÷ ((1+(7.75%×6))
= $9500 ÷ ((1+(0.0775×6))
= 9500 ÷ (1+0.465)
= 9500 ÷1.465
= $6484.64
Thus, the Present value of the settlement of the amount of $9500 received in 6 years and with the interest rate of 7.75% is $6484.64.
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