You are serving on a jury. A plaintiff is suing the city for injuries sustained after a
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1) The present value of two years’ back pay. The plaintiff’s annual salary for the last two years would have been $38,000 and $40,000, respectively.
2) The present value of five years’ future salary. You assume the salary will be $45,000 per year.
3) $200,000 for pain and suffering.
4) $30,000 for court costs. Assume that the salary payments are equal amounts paid at the end of each month. If the interest rate you choose is a 7 percent EAR, what is the size of the settlement? If you were the plaintiff, would you like to see a higher or lower interest rate?
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Related Book For
Corporate Finance Core Principles and Applications
ISBN: 978-0077905200
3rd edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford
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