You Have Received a Settlement Offer from an Automobile Manufacturer

question 1

Multiple Choice

You have received a settlement offer from an automobile manufacturer due to mechanical problems with your automobile.The manufacturer will pay you $49,000 in one lump sum five years from now.You can earn 6% on your investments.The present value of $1 for 5 periods at 6% is 0.747.The present value of an ordinary annuity of $1 for 5 periods at 6% is 4.212.The present value of the manufacturer's settlement offer is closest to:

• A)$36,015.
• B)$49,000.
• C)$36,603.
• D)$206,388.

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