Suppose that as a result of a personal injury lawsuit, Erik won a judgement for $800,000.

Suppose that as a result of a personal injury lawsuit, Erik won a judgement for $800,000. This will not be paid out all at once, but will instead be paid in equal annual payments totalling $800,000, spread out over 20 years, starting immediately.

A finance company offers to give him a lump sum payment immediately in exchange for him signing his payments over to them. The interest rate the company uses is 8%.

How much would they give Erik as a lump sum if he takes this deal?

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