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Problem:

John just received a settlement from a lawsuit that pays him $125,000 immediately, followed by amounts of $125,000 at the end of each year over the next 10 years with one exception - lawyer fees reduce the amount in Year 3 to $75,000.

Required:

Question: Using an interest rate of 6.5%, which of the following comes closest to the equivalent present value?

Note: Please show how to work it out.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M91173639

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