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
A)  A portfolio's daily changes have a standard deviation of $15 million. Suppose the daily changes in the portfolio's value have a first order serial correlation of 0.25. Calculat

Q. Show the Foreign Tax Credit? Foreign Tax Credit - A U.S. taxpayer who pays or accrues income tax to a foreign country may elect to credit or deduct these taxes in a determin

what is ex interest accounting,uses,types

You are considering whether to replace an existing flow meter in an ongoing operation. A change in the meter will have not affect revenues but will reduce costs. The existing meter

SMALL BANKRUPTCIES The court may order the estate of a debtor to be administered summarily, if the debtor's assets are not likely to exceed Shs 12,000 in value.  This is known

Court jurisdiction A court may limit a grant of representation which it has jurisdiction to make, as follows: 1. Where the will has been lost or mislaid since the testator's

The following market data are available for interest rates and volatilities associated with standard maturities: Suppose you are holding a bond portfolio which invests in a


How do I know how much is service fee ?