Question
A brilliant young scientist is killed in a plane crash. It is anticipated that he could have earned $310,000 a year for the next 30
A brilliant young scientist is killed in a plane crash. It is anticipated that he could have earned $310,000 a year for the next 30 years. The attorney for the plaintiffs estate argues that the lost income should be discounted back to the present at 4 percent. The lawyer for the defendants insurance company argues for a discount rate of 9 percent. |
What is the difference between the present value of the settlement at 4 percent and 9 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.) |
Present Value | ||
PV at 4% rate | $ | |
PV at 9% rate | ||
Difference | $ | |
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