Megan Alexander was injuried in an auto accident on December 31, 2019. She has been deemed by medical and vocational experts to be completely disabled from her ability to complete any kind of employment function. As of the date of her injury, she was earning an annual salary of $100,000 and was scheduled to receive a raise of 2.50%, starting on Janaury 1, 2020. The total healthcare cost paid by the employer is $12,000 in 2019 and is expected to rise 4%, starting January 1, 2020.

The insurance company has agreed to compensate her for lost wages and benefits for the year 2020, with one payment each year on the final day of the year (December 31). Her company encourages retirement no later than a person’s 65th birthday and Megan planned to retire on her 65th birthday, January 1, 2045. There are no lost pension benefits nor lost household services.

The settlement agreement requires that the insurance company place the present value of lost wages and benefits into a trust for distribution at the end of the year.

Other important facts and information are as follows:

Use the following template to estimate the “Present Value of Future Loss of Income and Benefits:”

  

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Economic Damages Assumptions for Megan Alexander Name of Injured: Date of Birth: Sex: Ethnicity: Marital status: Children: Age/Date of Injury: Age/Date of Planned Retirement: Age/Life Expectancy: Annual Amounts: Current Income Mitigating Income Current Healthcare Taxes: Risk of Unemployment: Wage Growth Rate: Health Care Growth Rate: Discount Rate (U.S. Treasury website): 20 Years - Future Loss of Income Megan Alexander 1/1/1980 Female Hispanic Never Married None 40 12/31/2019 65.00 Years 1/1/2045 75-9 Years 11/16/2055 $100,000 $0 $12,000 None 2.00% 2.50% 4.00% 3.00% Economic Damages Assumptions for Megan Alexander Name of Injured: Date of Birth: Sex: Ethnicity: Marital status: Children: Age/Date of Injury: Age/Date of Planned Retirement: Age/Life Expectancy: Annual Amounts: Current Income Mitigating Income Current Healthcare Taxes: Risk of Unemployment: Wage Growth Rate: Health Care Growth Rate: Discount Rate (U.S. Treasury website): 20 Years - Future Loss of Income Megan Alexander 1/1/1980 Female Hispanic Never Married None 40 12/31/2019 65.00 Years 1/1/2045 75-9 Years 11/16/2055 $100,000 $0 $12,000 None 2.00% 2.50% 4.00% 3.00%

Answer rating: 100% (QA)

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