Question

Suppose that, in response to a claim that resulted in physical injury, an insurance company is...

Suppose that, in response to a claim that resulted in physical injury, an insurance company is responsible for making 25 annual medical payments. The first payment, to be made now, will be 50,000. After that, the payments will increase annually for inflation, at a rate of 6% per year. The real interest rate is 4% per year. Calculate the present value these 25 payments.

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