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The present value of 2 years back pay.

by | Dec 1, 2023 | Posted Questions

A plaintiff has been awarded the following:

 (1) The present value of 2 years back pay. The plaintiff’s annual salary for the last 2 years would have been $40,000 and $43,000, respectively. 

(2) The present value of 5 years’ future salary, which is assumed to be $45,000 per year. 

(3) $100,000 for pain and suffering. 

(4) $20,000 for court costs. Assume salary payments are equal amounts paid at the end of each month and that the appropriate interest rate is a 9% EAR. What is the size of the settlement?

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