A brilliant young scientist is killed in a plane crash. It was anticipated that
ID: 2660120 • Letter: A
Question
A brilliant young scientist is killed in a plane crash. It was anticipated that he could have earned $320,000 a year for the next 40 years. The attorney for the plaintiff
A brilliant young scientist is killed in a plane crash. It was anticipated that he could have earned $320,000 a year for the next 40 years. The attorney for the plaintiff's estate argues that the lost income should be discounted back to the present at 5 percent. The lawyer for the defendant's insurance company argues for a discount rate of 11 percent. What is the difference between the present value of the settlement at 5 percent and 11 percent? Compute each one separately. Use Appendix D. (Round "PV Factor" to 3 decimal places. Round your answers to the nearest dollar amount. Omit the "$" sign in your response)Explanation / Answer
P.V. at 5% = 320000*pvifa(5%,40)
= 320000*17.159
=5490880
P.V. AT 11% = 320000*PVIFA(11%,40)
= 320000*8.951
=2864320
DIFFERENCE = 2626560
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.