You are serving on a jury. A plaintiff is suing the city for injuries sustained after a freakstreet sweeper accident. In the trial, doctors testified that it will be five years before theplaintiff is able to return to work. The jury has already decided in favor of the plaintiff. Youare the foreperson of the jury and propose that the jury give the plaintiff an award tocover the following: (a) The present value of two years' back pay. The plaintiff's annualsalary for the last two years would have been $38,000 and $41,000, respectively. (b) Thepresent value of five years' future salary. You assume the salary will be $45,000 per year.(c) $100,000 for pain and suffering. (d) $17,000 for court costs. Assume that the salarypayments are equal amounts paid at the end of each month. If the interest rate youchoose is an EAR of 9 percent, what is the size of the settlement? (Do not roundintermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)Size of the settlementIf you were the plaintiff, would you like to see a higher or lower interest rate?O Higher interest rateO Lower interest rate

Size of settlement would be present value and future value of the salaries and cost of legal and…

Answered: You are serving on a jury. A plaintiff…

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 street sweeper accident. In the trial, doctors testified that it will be five years before the plaintiff is able to return to work. The jury has already decided in favor of the plaintiff. You are the foreperson of the jury and propose that the jury give the plaintiff an award to cover the following: (a) The present value of two years' back pay. The plaintiff's annual salary for the last two years would have been $33,000 and $36,000, respectively. (b) The present value of five years' future salary. You assume the salary will be $40,000 per year. (c) $100,000 for pain and suffering. (d) $12,000 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 an EAR of 8 percent, what is the size of the settlement? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Size of the…
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You are serving on a jury. A plaintiff is suing the city for injuries sustained after a freak street sweeper accident. In the trial, doctors testified that it will be five years before the plaintiff is able to return to work. The jury has already decided in favor of the plaintiff. You are the foreperson of the jury and propose that the jury give the plaintiff an award to cover the following: (a) The present value of two years' back pay. The plaintiff's annual salary for the last two years would have been $34,000 and $37,000, respectively. (b) The present value of five years' future salary. You assume the salary will be $41,000 per year. (c) $100,000 for pain and suffering. (d) $13,000 for court costs. Assume that the salary payments are equal amounts paid at the end of each month. If the appropriate rate you choose is an EAR of 7 percent, what is the size of the settlement? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Size of the…
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You are serving on a jury. A plaintiff is suing the city for injuries sustained after a freak street sweeper accident. In the trial, doctors testified that it will be five years before the plaintiff is able to return to work. The jury has already decided in favor of the plaintiff. You are the foreperson of the jury and propose that the jury give the plaintiff an award to cover the following: (a) The present value of two years’ back pay. The plaintiff’s annual salary for the last two years would have been $43,000 and $46,000, respectively. (b) The present value of five years’ future salary. You assume the salary will be $51,000 per year. (c) $150,000 for pain and suffering. (d) $20,000 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 an EAR of 6.5 percent, what is the size of the settlement? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

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