Present value Mary Lee Tucker has just turned 17.

Her boyfriend, Scotty, decided to have a party for her. The party was thrown in Scotty’s parent’s basement with their full knowledge and consent. Although there were many minors involved, alcohol flowed freely. On her way home, Mary Lee ran a stop sign and got blindsided by a Volvo. Although she walked away from the accident unharmed, her parents were furious that Scotty’s parents had allowed underage drinking in their own house. In response, Mary Lee’s parents sued Mike’s parents for $100,000, citing negligence, to cover the expense of the totaled car, as well as the emotional distress they endured. The judge sided with Mary Lee’s parents and awarded her the $100,000 settlement.

However, the payment schedule is a bit odd. Mary Lee is to receive nothing until her 21st birthday, at which time she will receive $5,000 every 6 months for the next four years. At that point (her 25th birthday), she will begin to receive $2,500 every 6 months until the entire $100,000 settlement is met. Assuming that we expect a constant rate of 9 % APR, compounded semiannually over the entire time period, what is the settlement worth to Mary Lee today?