Question
Paul was injured in an accident. In addition to considerable discomfort, the best estimate is that his medical expense in 2009 will be $100,000. In
Paul was injured in an accident. In addition to considerable discomfort, the best estimate is that his medical expense in 2009 will be $100,000. In the future, those expenses will increase at 10% per year. Paul had been earning $50,000 per year, but will only earn 80% of that in the future. Labor economists expect those in Paul's occupation to experience a 3% annual increase in earnings. Assume Paul has a 10-year work life and a 20-year expected natural life remaining. Also assume that the appropriate discount rate is 5%. How much should Paul be awarded? (Ignore tax considerations.)
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