You are serving on a jury. A plaintiff is suing the city for injuries sustained after a freak doggie poo accident. In the trial, doctors testified that it will be 5 years before the plaintiff is able to return to work. The jury has already decided in favour of the plaintiff. You are the foreperson of the jury and propose that the jury give the plaintiff an award to cover the following: (1) The present value of 2 years’ back pay. The plaintiff’s annual salary for the last 2 years would have been €25,000 and €28,000, respectively. (2) The present value of 5 years’ future salary. You assume the salary will be €28,000 per year. (3) €100,000 for pain, suffering and humiliation. (4) €20,000 for court costs. Assume that the salary payments are equal amounts paid at the end of each month. Required: If the interest rate you choose is a 4 per cent APR, what is the size of the settlement? (Do not include the euro sign (€). Round your answer to 2 decimal places (e.g., 32.16).) Total settlement € If you were the plaintiff, would you like to see a higher or lower interest rate?
You are serving on a jury. A plaintiff is suing the city for injuries sustained after a freak doggie poo accident. In the trial, doctors testified that it will be 5 years before the plaintiff is able to return to work. The jury has already decided in favour of the plaintiff. You are the foreperson of the jury and propose that the jury give the plaintiff an award to cover the following: (1) The present value of 2 years’ back pay. The plaintiff’s annual salary for the last 2 years would have been €25,000 and €28,000, respectively. (2) The present value of 5 years’ future salary. You assume the salary will be €28,000 per year. (3) €100,000 for pain, suffering and humiliation. (4) €20,000 for court costs. Assume that the salary payments are equal amounts paid at the end of each month. Required: If the interest rate you choose is a 4 per cent APR, what is the size of the settlement? (Do not include the euro sign (€). Round your answer to 2 decimal places (e.g., 32.16).) Total settlement € If you were the plaintiff, would you like to see a higher or lower interest rate?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You are serving on a jury. A plaintiff is suing the city for injuries sustained after a freak doggie poo accident. In the trial, doctors testified that it will be 5 years before the plaintiff is able to return to work. The jury has already decided in favour of the plaintiff. You are the foreperson of the jury and propose that the jury give the plaintiff an award to cover the following: |
| (1) |
The |
| (2) | The present value of 5 years’ future salary. You assume the salary will be €28,000 per year. |
| (3) | €100,000 for pain, suffering and humiliation. |
| (4) | €20,000 for court costs. |
| Assume that the salary payments are equal amounts paid at the end of each month. |
| Required: |
|
If the interest rate you choose is a 4 per cent APR, what is the size of the settlement? (Do not include the euro sign (€). Round your answer to 2 decimal places (e.g., 32.16).) |
| Total settlement | € |
| If you were the plaintiff, would you like to see a higher or lower interest rate? |
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