ORDINARY ANNUITY - INTEREST RATE, PAYMENTS Anna was seriously injured in an accident. She sued the responsible parties and was awarded a judgment of $2,000,000. She and her attorney are attending a settlement conference with the defendants. The defendants offered to pay her $156,000 per year for 25 years. Anna plans to counteroffer at $255,000 per year for 25 years. Both offer/counteroffer will have the same PV of $2 million and assume year-end payments. http://www.tvmcalcs.com/calculators/excel tvm functions/excel tvm functions page2 (1). What interest rate assumption have the defendants used in their offer? (2). What was Anna's interest rate assumption for her counteroffer? (3). If Anna agrees to settle for an annuity that uses an annual interest rate of 9%, how much will she receive annually over the 25-year period? , Defendants' offer Anna's counteroffer What if Assumptions Judgment (PV) $ 2,000,000.00 $ 2,000,000.00 $ 2,000,000.00 3 Periods 25 25 25 Annual payment $ 156,000.00 $ 255,000.00 5 5 Interest rate 9% 7 B Answers: 9 (1). (2). 2 (3).