Receive a lump sum instead of the payments

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Your cousin was in an accident almost two years ago.He has just settled for a sum of $150,000. His attorney will take as his fee 1/3 of the settlement amount. Your cousin's portion of the settlement will be paid to him in amounts of $25,000 each year for 4 years with the first check to be received immediately. Another attorney called yesterday and asked your cousin if he would like to receive a lump sum instead of the payments. The attorney offered your cousin $85,000 right now if he will sign over the four payments of $25,000 to the attorney.Using a discount rate of 7%, should your cousin take the attorney up on his offer?

Reference no: EM131206023

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