rate of interest and discount rate, Financial Accounting

This is partly taken from a court case where one of my colleagues was a witness. Suppose that an employee is terminated without cause and that she sues the company for compensation.

-   Her wage used to be 20 000$ a year at the time of termination, and was set to grow at 5% a year.

-   Suppose we use the rate of interest as the discount rate, at 3%.

-   She still had 8 years to work there, before retirement.

-   They gave her severance pay of 5000$

-   At retirement, she would have been owed a pension equal to the best year in terms of pay (here, the last year, since the salary grows every year - so, for this one, use the wage rate you calculate at the end of the 8 year period). Let's assume she would have been projected to receive the pension for 10 years (note that the pension level does not increase at all any of these years)

How much should the company compensate her, assuming that they are found to be at fault?

Here again, outline all the steps of your reasoning. Grades will be awarded for the method as well as the answer.

Grading: This assignment is worth 10% of the grade. You will get 6 assignments throughout the semester, worth collectively 50% of the grade. You may submit all 6 and I will take the best five grade.

Posted Date: 3/21/2013 6:27:21 AM | Location : United States







Related Discussions:- rate of interest and discount rate, Assignment Help, Ask Question on rate of interest and discount rate, Get Answer, Expert's Help, rate of interest and discount rate Discussions

Write discussion on rate of interest and discount rate
Your posts are moderated
Related Questions
Ortiz Motors sponsors a defined-benefit pension plan for its employees. On January 1, 2013, the company's records showed the following account balances relevant to this plan: Plan

Profits in subsidiary company The remaining profits that belong to the holding company should be split between pre-acquisition profits and post acquisition profits. The pre

Simon Corporation's bonds have 12 years left over to maturity. Interest is paid yearly, the bonds have a $1,000 par value, and the coupon interest rate is 11.5%. The bonds have a y

Prepare journal entries to record the issuance of 100,000 shares of common stock at $20 per share for each of the following independent cases given below: a. Jackson Corporation

are the notes to the financial statements part of the financial reporting

Profitability Ratios - These ratios include the Gross profit Margin, Net profit Margin, Operating Margin, Return on Equity (ROE), and Return on Total Assets. These ratios helps t

SEC reporting implications i) Potentially inaccurate reporting of executive compensation in proxy statements and annual reports ii) Potential violation of securities and Law

Copper Suppliers, Inc. (CS), is a distributor of commercial grade copper. CS purchases copper directly from copper mines and then after refining it, sells the refined copper to in

The intestate leaves no spouse and no children The net estate devolves as follows: to his Father; or if dead Mother; or if dead Brothers and sisters, and any child o

Cleaning Co. began business on March 1, 2011. The company provides specialized cleaning services to corporate clients. Listed below are the transactions entered into by Cleaning Co