You are serving on a jury. A plaintiff is suing the city for injuries sustained

after a freak street sweeper accident. In the trial, doctors testified that it will

be five years before the plaintiff is able to return to work. The jury has

already decided in favor of the plaintiff. You are the foreperson of the jury

and propose that the jury give the plaintiff an award to cover the following:

$($a$)$ The present value of two years' back pay. The plaintiff's annual salary for

the last two years would have been $$45,000$ and $$48,000,$ respectively. $($b$)$

The present value of five years' future salary. You assume the salary will be

$$52,000$ per year. $($c$)$ $$100,000$ for pain and suffering. $($d$)$ $$24,000$ for court

costs. Assume that the salary payments are equal amounts paid at the end

of each month. If the interest rate you choose is an EAR of $9$ percent, what

is the size of the settlement?

Note: Do not round intermediate calculations and round your answer to $2$

decimal places, e$.$g$.,32\mathrm{.}16.$

Size of the settlement

If you were the plaintiff, would you like to see a higher or lower interest

rate?

Higher interest rate

Lower interest rate