4 Due to a car accident you receive a settlement from insura

4.  Due to a car accident you receive a settlement from insurance of $50 a month for the next ten years.  What is that worth to you today, assuming a 3% inflation rate?

Solution

The monthly inflation rate will be 3/12%=0.0025%

So, the value would be $50[(1/1.0025)+(1/1.0025)^2+(1/1.0025)^3+....+(1/1.0025)^120]

=$5178.09

Thus. the current value after adjusting for the inflation rate will be $5178.09