One of the great features of Typepad is to let me know what someone was searching for and on what search engine they were searching that led them to a particular blog post. Today the following search was entered into Google.
"Figuring present value for my lump sum settlement"
Yes that’s exactly what was typed in! Before any nitwits start twittering about how obvious the answer is, please pause and reflect that there clearly is a consumer segment that really does not know the answer. This leaves them vulnerable to many of the things we discuss on this blog.
Assuming that you agree to a lump sum settlement and the lump sum is paid today the present value IS the amount of the lump sum settlement.
If on the other hand you already have a structured settlement and you are selling (or transferring) your rights to receive those payments then the present value has a different significance. The latter in involves discounting future payments using some acceptable discount rate.
Need help on any of these calculations? Feel free to contact me.
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