Assume that Mrs. Cooks real income will not change over the next ten years. Use the mean real income from question 1 to determine projected real income for the future ten years of Mrs. Cooks work expectancy. Use the regression equation from question 2 to project adjusted price indices for the next ten years. Assume that Mrs. Cook pays 20% of her actual income in taxes and that Green will not provide significant state assistance. Use the projected real income and adjusted price indices to estimate Mrs. Cooks net actual income for the next ten years. What would be the likely amount of an award to Mrs. Cook based on a present value rate of 8%? Discuss the factors that could cause Mrs. Cooks future income to differ from your estimate.

EXHIBIT 3 Number Year Price Index* 188.9 195.3 1 2 3 4 2004 2005 2006 2007 2008 2009 2010 5 201.6 207.3 215.3 214.5 218.1 6 Gross Income 60,056 61,257 62,482 63,732 65,007 66,307 67,633 68,986 70,366 71,773 73,208 74,672 76,165 77,688 79,242 7 8 9 10 11 12 13 2011 2012 2013 2014 2015 2016 2017 2018 224.9 229.6 233.0 236.7 237.0 240.0 245.1 251.1 14 15 EXHIBIT 3 Number Year Price Index* 188.9 195.3 1 2 3 4 2004 2005 2006 2007 2008 2009 2010 5 201.6 207.3 215.3 214.5 218.1 6 Gross Income 60,056 61,257 62,482 63,732 65,007 66,307 67,633 68,986 70,366 71,773 73,208 74,672 76,165 77,688 79,242 7 8 9 10 11 12 13 2011 2012 2013 2014 2015 2016 2017 2018 224.9 229.6 233.0 236.7 237.0 240.0 245.1 251.1 14 15