: Assume that Carter prevails in his negligence and/or strict liability lawsuits. In determining the amount of damages
Posted: Sun Jul 03, 2022 1:06 pm
: Assume that Carter prevails in hisnegligence and/or strict liability lawsuits. In determiningthe amount of damages he may recover for loss of earnings considerthe following: Carter’s medical condition is such that he is unableto ever work again; he was 53 years of age at the time of theinjury and would have been expected to retire at the age of 65; hislife expectancy at the time of the injury was 77 years of age; heis an employee of the United States Postal Service covered by aunion contract projecting his wages to rise by 3% per year in realterms plus an annual Cost of Living Adjustment (COLA) equal to therate of inflation; and his current annual gross salary is$48,000.
a. Table 2 belowcontains the Consumer Price Index (CPI) for each of the past 10years. Determine the average annual percentage change in theCPI over the past 10 years. Explain the meaning of thisstatistic. What assumptions would have to be made aboutmonetary policy in the next 12 years to assume the average annualpercentage change in the CPI over the past 10 years can be used topredict future inflation rates?
b. Assume that 25%of Carter’s income is paid in state and federal income taxes andthat he will not receive any state or federal assistance due to hismedical condition. Using the information provided above andyour results in 2.a., project the likely amount of an award toCarter for lost future income based on a present value rate of8%.
Table 2: Year End Consumer Price Index (CPI) for the Years 1999to 2008
Year
Year End
CPI Value
1999
148.2
2000
152.4
2001
156.6
2002
162.5
2003
166.2
2004
169.8
2005
176.0
2006
183.1
2007
192.6
2008
199.0
I need help with B specificallyfinding the NPV and explaining the damages. Im a little confusedwith the npv and what numbers do I use.
a. Table 2 belowcontains the Consumer Price Index (CPI) for each of the past 10years. Determine the average annual percentage change in theCPI over the past 10 years. Explain the meaning of thisstatistic. What assumptions would have to be made aboutmonetary policy in the next 12 years to assume the average annualpercentage change in the CPI over the past 10 years can be used topredict future inflation rates?
b. Assume that 25%of Carter’s income is paid in state and federal income taxes andthat he will not receive any state or federal assistance due to hismedical condition. Using the information provided above andyour results in 2.a., project the likely amount of an award toCarter for lost future income based on a present value rate of8%.
Table 2: Year End Consumer Price Index (CPI) for the Years 1999to 2008
Year
Year End
CPI Value
1999
148.2
2000
152.4
2001
156.6
2002
162.5
2003
166.2
2004
169.8
2005
176.0
2006
183.1
2007
192.6
2008
199.0
I need help with B specificallyfinding the NPV and explaining the damages. Im a little confusedwith the npv and what numbers do I use.