How To Calculate Structured Settlement Present Value
If you are considering the sale of your structured settlement or annuity, in order to find out how much of a lump sum you can expect, you are going to need to know the settlement present value. Why? Because the lump sum of your settlements value is going to be worth less tomorrow than it does today. We're basically talking about inflation, and how the buying power of the dollar is forever dwindling.
Fifty years ago a top of the line supercar cost only a couple thousand dollars. Today, the same car would be worth hundreds of thousands. Keeping this in mind, if one of your ancestors buried $10,000 in their backyard, which would have been a lot in those days; if you found that today, it would not have nearly the impact it could have. This is because it was not invested properly and allowed to increase in value through interest and investment opportunity.
Many structured settlement websites offer a calculator to do the mathematics of your structured settlements present value for you, although most do not provide any indication of potential worth and ask you to call. The ones that do, it is helpful to see how this number is calculated to help you understand the lump sum value of your settlement.
The basic equation of Present Value is:
PV is the present value
PMT is the periodic payment amount
i is the interest rate
n is the number of compounding periods
The value of your settlement or annuity will always be worth less in the future. To find out the potential worth of your settlement, try our calculator for a quick quote. Note that there are many variables and this is an approximate range based on just a few details asked.
If you would like to receive a more accurate figure, please complete the quote form.