1. What is a Present Day Value Calculator for Work Comp?

Definition: This calculator determines the current worth of future workers' compensation payments by applying a discount rate over time.

Purpose: It helps insurance professionals, attorneys, and claimants evaluate the present value of future compensation payments.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( PV \) — Present value (USD)
• \( FV \) — Future compensation value (USD)
• \( r \) — Discount rate (decimal)
• \( t \) — Time period (years)

Explanation: The future value is discounted back to present value based on the rate and time period.

3. Importance of Present Value Calculation

Details: Accurate present value calculations ensure fair settlements by accounting for the time value of money and investment opportunities.

4. Using the Calculator

Tips: Enter the future compensation amount, discount rate (default 0.03 for 3%), and time period in years. All values must be > 0 except rate which can be 0.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical discount rate for workers' comp?
A: Rates vary but often range from 2-5% (0.02-0.05). Courts may specify rates for settlements.

Q2: Why discount future payments to present value?
A: Money available now can be invested, so future payments are worth less in today's dollars.

Q3: How do I determine the appropriate discount rate?
A: Consider risk-free rates (like Treasury bonds) plus a risk premium. Consult financial experts.

Q4: Can I calculate monthly instead of yearly?
A: Yes, but convert the annual rate to monthly and use months for the time period.

Q5: What if payments are spread over multiple years?
A: Calculate each payment's PV separately and sum them for the total present value.