Present Value for 280G Parachute Payments

[Guest Fourohonekay]

Can anyone set forth a short, but descriptive, step-by-step methodology for determining the present value of a stream of future payments to a husband and a wife out of a SERP (continuing until the last of them dies)?

The husband (the employee) is 66 and his wife is 65. The husband is scheduled to begin receiving annual payments of $80,500 when he turns 70. The present-value discount rate that must be used is 5.17% (i.e., 120% of the long-term AFR (compounded semi-annually) for August 2003).

What are the steps to take to determine the present single-sum value of that stream of payments? Thanks.

[Kirk Maldonado]

Many service providers charge a hefty sum to do those computations.