Gustav was sued by one of his employees for not performing regular maintenance on the companys equipment. In December 2017, the employee was seriously injured and will not return to work for five more years. (Today is January 1st, 2020, and the employee will return to work in January, 2025.) The jury decided to give the employee the following:

• - The present value of the employees salary in 2018. The salary was $38,000 paid monthly, at the end of each month.

• - The present value of the employees salary in 2019. The salary was $42,000 paid monthly, at the end of each month.

• - The present value of five years future salary. The annual salary will be $45,000 per year, paid monthly, at the end of the month.

• - $170,000 for court costs and for pain and suffering.

1. a) Gustav needs you to compute the total amount of the settlement. The interest rate you

   must use is 6.785%.

   b) Would Gustav like to see a higher or a lower rate? Explain your answer.
   1. Check point: final answer for part a is $445,635.76