In 2013,Khalid Was in an Automobile Accident and Suffered Physical

question 144

Multiple Choice

In 2013,Khalid was in an automobile accident and suffered physical injuries.The accident was caused by Rashad's negligence.Khalid threatened to file a lawsuit against Amber Trucking Company,Rashad's employer,claiming $50,000 for pain and suffering,$90,000 for loss of income,and $70,000 in punitive damages.Amber's insurance company will not pay punitive damages; therefore,Amber has offered to settle the case for $100,000 for pain and suffering,$90,000 for loss of income,and nothing for punitive damages.Khalid is in the 35% marginal tax bracket.What is the after-tax difference to Khalid between Khalid's original claim and Amber's offer?

• A)Amber's offer is $20,000 less.($50,000 + $90,000 + $70,000 - $100,000 - $90,000).
• B)Amber's offer is $7,000 less.[($50,000 + $90,000 + $70,000 - $100,000 - $90,000)´ .35)].
• C)Amber's offer is $4,500 more.{$190,000 - ($50,000 + $90,000)+ [$70,000 ´ (1 - .35)]}.
• D)Amber's offer is $22,000 more.[($190,000 - $210,000)+ ($120,000 ´ .35)].
• E)None of the above.

---

Definitions:

Behavioral Risk

Behaviors that increase the likelihood of developing health problems or harm, such as smoking, poor diet, and physical inactivity.

Lung Cancer Deaths

Fatal outcomes resulting from lung cancer, a disease characterized by uncontrolled cell growth in tissues of the lung.

Agricultural Demand

The total request or need for agricultural products, influenced by factors such as population growth, dietary preferences, and biofuel policies.

Unstable

Lacking consistency, predictability, or stability; prone to sudden change or variability.