A worker, who is typical in all respects, works for a wage of $30,000 per year in a perfectly safe occupation. Another typical w
orker does a job requiring exactly the same skills as the first worker, but in a risky occupation with a known death probability of 1 in 1,000 per year, and receives a wage of $36,000 per year. What value of a human life for workers with these characteristics should a cost-benefit analyst use?
2 answers:
You might be interested in
Answer:
5.70%
Explanation:
In this question, we applied the RATE formula that is shown on the attachment below:
Provided that,
Present value = $1,000 × 105% = $1,050
Assuming figure - Future value or Face value = $1,000
PMT = 1,000 × 6.250% ÷ 2 = $31.25
NPER = 13 years × 2 = 26 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after solving this, the yield to maturity is 5.70%
We assume the semi annual basis is followed so we half the interest rate and the coupon rate and doubles the time period
