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.

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Definitions:

Global Strategy

A strategy that involves planning and conducting transactions across national borders to meet the objectives of individuals and organizations on a global scale.

Culturally Sensitive

An approach that is aware of and respects the cultural differences and similarities between people without assigning them a value.

Multidomestic Strategy

A business strategy that involves adapting products and marketing strategies to fit the specific demands of different national markets.

Foreign Nationals

People who hold citizenship in a different country from where they currently reside or are employed.