Important Notice: Our web hosting provider recently started charging us for additional visits, which was unexpected. In response, we're seeking donations. Depending on the situation, we may explore different monetization options for our Community and Expert Contributors. It's crucial to provide more returns for their expertise and offer more Expert Validated Answers or AI Validated Answers. Learn more about our hosting issue here.

Please explain, how is a discounted lump sum worth more than the full balance of my note?

April 26, 2017Balance discounted explain lump note worth

0

Posted

Please explain, how is a discounted lump sum worth more than the full balance of my note?

1 Answer

0

Posted

Let’s assume you had a $60,000 real estate note with 120 months remaining that you wanted to cash out and invest, and we quoted the cash value of the note at $53,000. If you were to invest this lump sum of $53,000 at today’s stock market average of 10.00%, for the remainder of the term of the note, the cash value could increase to over 84,468.00 In addition, you may be able to use a lump sum of cash to take advantage of an exceptional investment opportunity that is available now, but may not be available in the future, thereby possibly increasing your return exponentially.