Question
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
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 7%? Do your calculations for question 3 in the following order:
1. Use mean real income from question 1 to determine projected real income for 2019 2028. 2. Use regression equation from question 2 to determine projected adjusted price indices. 3. Use projected real income, adjusted price indices, and tax to estimate Mrs. Cooks net actual income for 2019 2028. 4. Determine the present value of the future net cash flow.
Mean Income $31,104.12
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