Question
A brilliant young scientist is killed in a plane crash. It is anticipated that he could have earned $390,000 a year for the next 20
A brilliant young scientist is killed in a plane crash. It is anticipated that he could have earned $390,000 a year for the next 20 years. The attorney for the plaintiff's estate argues that the lost income should be discounted back to the present at 7 percent. The lawyer for the defendant's insurance company argues for a discount rate of 13 percent.
What is the difference between the present value of the settlement at 7 percent and 13 percent? Compute each one separately.UseAppendix Dfor an approximate answer but calculate your final answer using the formula and financial calculator methods.(Do not round intermediate calculations. Round your answers to 2 decimal places.)
PV at 7% rate_________
PV at 13% rate__________
Difference________
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