If you were the plaintiff, would you like to see a higher or lower interest rate? Please provide numerical proof.You may use an interest rate higher or lower than 5% to recalculate the settlement.

As the plaintiff, I would prefer a lower interest rate.Basically, in this problem, we are calculating both the PV and FV of annuities.A lower interest rate will decrease the FVA but increase the PVA.So, by a lower interest rate, we are lowering the value of the back pay.But we are also increasing the PV of the future salary.Since the future salary is larger and has a longer time, this is the more important cash flow to the plaintiff.

(b)

(c)

(d)

Based on your above calculations, what is the size of the settlement?

If you were the plaintiff, would you like to see a higher or lower interest rate? Please provide numerical proof.You may use an interest rate higher or lower than 5% to recalculate the settlement.