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A brilliant young scientist is killed in a plane crash. It is anticipated that he could have earned $440,000 a year for the next 20

A brilliant young scientist is killed in a plane crash. It is anticipated that he could have earned $440,000 a year for the next 20 years. The attorney for the plaintiffs estate argues that the lost income should be discounted back to the present at 8 percent. The lawyer for the defendants insurance company argues for a discount rate of 12 percent.

What is the difference between the present value of the settlement at 8 percent and 12 percent? Compute each one separately. Use Appendix D for 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 8% rate
PV at 12% rate
Difference

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