Statistical Analysis
On February 18, 2006, Mrs. Kim requested that Baron Art Mart, Inc. compensate her for the permanent injuries inflicted on her by one of their employees while falsely imprisoning her on January 3, 2006. Since the injury left her with a permanent disability that wont allow her to work for the next ten years until her retirement, she is demanding compensation of $765,000 in medical expenses and $500,000 for her loss of future income. Mrs. Kim has provided us with her yearly gross income from her sales position at a pharmaceutical company called Derk from the past fifteen years. I will use Mrs. Kim’s yearly gross income to determine her projected real income for the next ten years to see if her request for $500,000 for loss of future income is reasonable. In order to begin our analysis, we need to calculate Mrs. Kim’s real income. To find her real income from the past fifteen years, we first had to divide each price index divided by one hundred to obtain an adjusted price index. The price index, also known as inflation, is a weighted average that measures the price change over a period of time by comparing the prices of any year with the prices of its base year. By dividing each price index by one hundred, we are calculating the adjusted price index which is the percent of change in inflation in for each of those years. As you can see, the price indexes in Mrs. Kim’s attached document show that her gross income is increasing every year but also at an increasing rate. The price indexes were constructed by comparing the total cost of a fixed market basket of goods in one year by its base year. After we calculate the adjusted price index for each year, we divide Mrs. Kim’s yearly gross income by its adjusted price index to find out what her real income for each year was. The real income is the amount of income an individual receives for a year after