5. You have just won a court case and will receive a $90,000,000 court settlement one year from now (this is net of all attorney & court fees and net of taxes). Suppose the one- year interest rate is 50 percent. Assume also that you are risk neutral. USE THE PRESENT DISCOUNTED VALUE APPROACH IN YOUR ANSWERS .

   1. a) What is the present value of the court settlement right now?

   2. b) Suppose you knew for certain that you were not going to spend the money for at least one year and suppose your best investment opportunity paid 50

      percent after one year. If a company offers to pay you $55,000,000 right now in exchange for receiving your settlement a year from now, would it make sense to do so? State the specific reasoning behind your answer and show the relevant calculation(s).

   3. c) Suppose interest rates equaled 100 percent and the company offered you $50,000,000 instead. Would it make sense to take their offer? State the specific reasoning behind your answer and show the relevant calculation(s).