You are serving on a jury. A plaintiff is suing the city for injuries sustained after a freak accident. In the trial, the doctors testified that it will be 5 years before the plaintiff is able to return to work. The jury has already decided in favour of the plaintiff. You are the foreperson of the jury and propose that the jury pay the plaintiff a four-part award, consisting of the following:

The present value of 2 years' back pay. The plaintiff's salary for the last two years would have been 25,000 and 28,000 respectively.

The present value of 5 years' future salary. You assume that the salary will be 28,000 per year.

100,000 for pain, suffering and humiliation.

20,000 for court costs.

Required

Assume that the salary payments are equal amounts paid at the end of each month. If the interest rate you choose is 4% per annum, calculate the size of the settlement.