Question

Miles Morales was injured in a boating accident with Doctor Octopus. Miles filed a lawsuit for his injuries against Dr. Octopus and proposed a settlement: Damages for the use of his hands $100,000 Medical expenses 50,000 Loss of income 15,000 Punitive damages 200,000 The insurance company for Doctor Octopus reviewed the proposed settlement and they are unwilling to pay any amount in punitive damages and they also dispute the amount of lost income. They have counter-offered with a payment of $275,000 for damages to his hands and $50,000 in medical expenses. Assume Miles is in the 32% tax bracket. Should he accept the offer? Explain your answer

Answer 1