Bill is killed in a car accident and his family is suing the other driver for the
Question:
Bill is killed in a car accident and his family is suing the other driver for the value of his lost wages. The man earned $60,000 per year and was expected to work for 4 more years (including the current year). You can treat his salary as being paid at the beginning of each year and the borrowing and lending rate of interest is 5% every year. a. If Bill’s salary is expected to remain the same and he will not die by some other causes before he retires, what is the PDV of his lost earnings? b. Suppose Bill’s salary is expected to grow by 5% per year and the probability that he dies from some other cause before year t is 2t (t=0 for the current year). What is the PDV of his lost earnings? c. The lawyer for the other driver wants to argue that the value of Bill’s lost earnings are lower than those calculated by Bill’s lawyer. Discuss two arguments the lawyer might give to justify his claim.
Introduction To Business Law
ISBN: 9780324826999
3rd Edition
Authors: Jeff Rey F. Beatty, Susan S. Samuelson