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Tod Lohman has filed a lawsuit against the party alleged to be at fault in an accident resulting in his total disability. You have been hired to provide expert testimony during the damage phase of the trial concerning the present value of Mr. Lohman's lost earning power. At the time of the accident, Mr. Lohman was earning a yearly salary of $140,000. Work expectancy tables provided by the Bureau of Labor Statistics show that Mr. Lohman would have been expected to work another 25 years before retiring. The demand for specialists with Mr. Lohman's training and work history indicate that a combination of job performance and cost of living adjustments would have permitted his earnings to increase by roughly 5.8 percent per year throughout his career. Southwestern Mutual Life's actuarial tables indicate that Mr. Lohman has a current life expectancy of 40 years. Assuming that prices are expected to increase steadily at 4.0 percent per year over the next 40 years and that the money from any damage award can be invested at 11 percent per year.
a. determine the economic (present) value of Mr. Lohman's lost earnings.
b. determine the initial yearly income that could be provided from a damage award equal to the amount in part (a) assuming that Mr. Lohman would want the purchasing power of his yearly income to remain constant for his remaining lifetime.
Coefficient of variation Metal Manufacturing has isolated four alternatives for meeting its need for increased production capacity. The following table summarizes data gathered relative to each of these alternatives.
joe's company's bonds have 10 years remaining to maturity. Interest is paid annually, the bonds have a $1000 par value, and the cooupon interest rate is 6%. the bonds have a yield to maturity of 9%.
What is the expected return on the firm's equity before the announcement of the stock repurchase plan and what is the value of equity after the announcement of the stock repurchase plan?
The Serial Bond "B" information is as follows; Maturity date 8-1-14 in the Amount $6,640, a Rate of 5.00%, with the Yield being .390%. The Bond Price is 11.559, and the Premium Discount is 388.06.
Consider the flow of funds for a publicly traded bank that is a key lender to Carson company. This bank received equity funding from shareholders, which it used to establish its business.
A zero coupon bond with a face value of $1,000 is issued with an initial price of $440.50. The bond matures in 15 years. What is the implicit interest, in dollars, for the first year of the bond's life
Patterson, Inc. receives a $16,000 payment two years in advance of delivering a completed novel. A five percent interest rate applies. Prepare the journal entries which Patterson, Inc. would record for the cash receipt and revenue recognition.
Calculate the present value of a perpetuity that makes a payment of $1,000,000 every 6 months, with the next payment being made in exactly 6 months from now.
if a six month treasury bill is purchased for .9675 on the dollar, what is the discount yield, the annual rate of interest, and the compound interest. what will these yields be if the discount price falls to .94
Current Salary is (156,372.31) According to financial planners, the average retiree requires approximately 70% of their last year's working salary to live comfortably in retirement.
The McGregor Whisky Company is proposing to market diet scotch. The product will first be test-marketed for two years in southern California at an initial cost of $610,000.
If you deposit $5,200 at the end of each of the next 25 years into an account paying 10.30 percent interest, how much money will you have in the account in 25 years
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