A brilliant young scientist is killed in a plane crash. It was anticipated that he could have earned $320,000 a year for the next 40 years. The attorney for the plaintiff's estate argues that the lost income should be discounted back to the present at 5 percent. The lawyer for the defendant's insurance company argues for a discount rate of 11 percent.
What is the difference between the present value of the settlement at 5 percent and 11 percent? Compute each one separately. Use Appendix D.