Benny was seriously injured at his place of employment and can no longer work. If Benny hadn't been injured, he would have worked five more years and would have earned $60,000 each year. The present discounted value of Benny's lost earnings at a 5% interest rate is $____.

Question

Quizplus · Accepted Answer

The present discounted value of Benny's lost earnings can be calculated using the formula for the present value of an annuity. Given that Benny would have earned $60,000 each year for five years and using a 5% discount rate, the calculation is as follows: PV = P * [(1 - (1 + r)^-n) / r], where P = $60,000, r = 0.05, and n = 5. Plugging these values into the formula gives a present value of approximately $259,768.60.

Benny Was Seriously Injured at His Place of Employment and Can