Question

12)A brilliant young scientist is killed in a plane crash. It is anticipated that he could have earned $340,000 a year for the next 20 years. The attorney for the plaintiff’s estate argues that the lost income should be discounted back to the present at 7 percent. The lawyer for the defendant’s insurance company argues for a discount rate of 14 percent.
 What is the difference between the present value of the settlement at 7 percent and 14 percent? Compute each one separately. Use Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
  Present Value  PV at 7% rate$    PV at 14% rate      Difference$   

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