Employee Paul was injured at your plant. Last year Paul had $150,000 in medical expenses...

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Employee Paul was injured at your plant. Last year Paul had $150,000 in medical expenses (which your firm has already paid). This year and every other year in the future those expenses will increase by 10 percent per year. The medical expenses are all paid at the end of the year. The average salary in Paul's profession last year was $50,000. Because of the accident, Paul earns only 80 percent of that average, so last year he earned only $40,000 (and your firm has already paid his lost 20 percent, or $10,000). Labor economists expect workers in Paul's occupation to experience a 3 percent annual increase in earnings. Paul's lost wages are paid at the end of each year. Assume that Paul has a 10-year work life and a 20 -year expected life remaining. Also assume that the appropriate discount rate is 5 percent. Which of the following statements describe what your company must pay Paul to make him financially whole? A. Your firm must pay Paul his medical expenses over his -year life span and his lost salary over his -year work life. You should pay the present value of the medical expenses, which is the sum of each year's present value for years and the future value of the lost income, which is the sum of each year's future value for years. B. Your firm must pay Paul his medical expenses over his -year life span and his lost salary over his -year work life. You should pay the present value of the medical expenses, which is the sum of each year's present value for years and the present value of the lost income, which is the sum of each year's present value for years. C. Your firm must only pay Paul his medical expenses over his -year life span. You should pay the present value of the medical expenses, which is the sum of each year's present value for years. D. Your firm must only pay Paul his lost salary over his -year work life. You should pay the present value of the lost income, which is the sum of each year's present value for years

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