Author Question: The authors provide an example that illustrates the calculation of the present discounted value for ... (Read 115 times)

james0929 · **on:** Jul 1, 2018

The authors provide an example that illustrates the calculation of the present discounted value for the lost wages from a deceased worker, and one component in this calculation is the worker's annual mortality rate (m).

Suppose we conduct this computation in two different ways --- one calculation assumes m is constant for all future periods, and the other calculation allows m to decline over time due to improvements in medical technology. Which estimated PDV will be larger? A) The PDV with constant m will be larger
B) The PDV with variable m will be larger
C) The two PDV's will be equal
D) The answer to this question depends on the assumed interest rate

Question 2

Refer to Scenario 10.1. The price of her product will be ________.

A) 4
B) 22
C) 32
D) 42
E) 72