You are serving on a jury. A plaintiff is suing the city for injuries sustained after...
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You are serving on a jury. A plaintiff is suing the city forinjuries sustained after a freak street-sweeper accident. In thetrial, doctors testified that it will be five years before theplaintiff is able to return to work. The jury has already decidedin favor of the plaintiff. You are the foreperson of the jury andpropose that the jury give the plaintiff an award to cover thefollowing: (a) The present value of two years’ back pay. Theplaintiff’s annual salary for the last two years would have been$44,000 and $47,000, respectively. (b) The present value of fiveyears’ future salary. You assume the salary will be $51,000 peryear. (c) $200,000 for pain and suffering. (d) $25,000 for courtcosts. Assume the salary payments are equal amounts paid at the endof each month. a. If the interest rate you choose is an EAR of 7percent, what is the size of the settlement? (Do not roundintermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.) b. If you were the plaintiff, would you liketo see a higher or lower interest rate?
You are serving on a jury. A plaintiff is suing the city forinjuries sustained after a freak street-sweeper accident. In thetrial, doctors testified that it will be five years before theplaintiff is able to return to work. The jury has already decidedin favor of the plaintiff. You are the foreperson of the jury andpropose that the jury give the plaintiff an award to cover thefollowing: (a) The present value of two years’ back pay. Theplaintiff’s annual salary for the last two years would have been$44,000 and $47,000, respectively. (b) The present value of fiveyears’ future salary. You assume the salary will be $51,000 peryear. (c) $200,000 for pain and suffering. (d) $25,000 for courtcosts. Assume the salary payments are equal amounts paid at the endof each month. a. If the interest rate you choose is an EAR of 7percent, what is the size of the settlement? (Do not roundintermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.) b. If you were the plaintiff, would you liketo see a higher or lower interest rate?
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