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Below is the case Artisan and the deliverable we are working on. in deliverable there is a main body which you need to read and based on that plus the case write a recommendation.
ARTISAN EMPORIUM, INC.©
Barry Levin, Customer Relations Manager, for Artisan Emporium, Inc. (“Artisan”), was in a
quandary. He pondered over a memo from Jimmie Lee, Loss Prevention Manager at
Artisan, (Exhibit 1) and a letter addressed to him from Susan Kim, a customer (Exhibit 2).
What appeared to have been a routine shoplifting incident on the part of Ms. Kim turned
out to lack evidence. To make matters worse, the suspect was injured during
apprehension. It appeared that Artisan faced the possibility of a lawsuit because of the
incident. Debbie West, Chief Administrator, had asked Mr. Levin to assess the legal and
financial consequences of the case, make recommendations, and report back to her.
Artisan is a large stationery and drawing supplies retailer with approximately 70 stores
located throughout the State of Green. The firm has been established for many years,
making steady, if unspectacular profits.
EXHIBIT 1
MEMORANDUM
DATE:
TO:
FROM:
SUBJECT:
January 3, 2016
File
Jimmie Lee, Loss Prevention Manager
Shoplifting Incident
______________________________________________________________________________
At 2:20 p.m. today, I observed a customer, Susan Kim, who was standing next to fountain
pen sets in the store, make a sudden move to her pocket. She then proceeded at an
accelerated pace toward the exit. I noticed that her side pocket was stuffed. I then
proceeded directly to where the customer had been standing and noticed that a fountain
pen set was missing. It so happened that I noticed earlier that day that the fountain pen sets
were fully stocked up. I assumed that the customer, who I had previously observed, had
shoplifted the set. As the customer was about to leave the store by then, I began chasing
after her and reached her at the store’s entrance. Fearing that I might lose her in the crowd,
I shouted at her to stop. I then grasped her by the arm and shoved her back to the store.
Apparently, the customer lost her balance and fell on her back hitting one of the checkout
counters. She seemed to be hurt a little, but then I offered to help her stand up, although
she continued to limp. I then asked her if she had forgotten to pay for something. She
seemed surprised and said that she does not understand what I am talking about. I then
directed her to follow me to the Loss Prevention room. Kimberly Youseff, one of the
checkout employees, helped her walk toward the Loss Prevention room as the customer
©
Copyright 2017, Dr. Rafi Efrat and Dr. Richard Gunther
1
complained she was having difficulties walking and was experiencing terrible back pain. I
closely walked behind the two of them.
Per store’s protocol, I then advised the customer that she would have to wait until the
store’s manager would come back from a meeting for the investigation to begin. The store’s
manager, Jennifer Parker, was due to return from a meeting at 2:30 p.m. that day.
Unfortunately, she only returned at 3:30 p.m. At that time, Ms. Parker advised the customer
why she was being held up and asked her to empty her pockets. However, no fountain pen
set was found. Ms. Parker then apologized for the inconvenience, gave her a $100 gift
certificate, and wished the customer well.
I really did not mean to hurt the customer, but apparently her fall did some damage to her
as she kept complaining that her back hurts.
EXHIBIT 2
February 18, 2016
Susan Kim
19853 Angel Blvd.
Angel City, Green
Debbie West, Chief Administrator
Artisan Emporium, Inc.
10984 Glitter Blvd.
Beverly Flats, Green
Re: incident dated January 3rd, 2016
Dear Ms. West:
Based on permanent injuries inflicted on me by one of your employees while falsely
imprisoning me on January 3rd, 2016, I demand compensation in the sum of $570,000 in
medical care expense and $950,000 for loss of future income.
On January 3rd, 2016, I came to your store to locate some art supplies for my daughter’s art
project at school. While I was examining a number of fountain pen sets that you had on the
shelves, I was not able to find the fountain pen set my daughter’s teacher requested.
Rushed to make it back to an appointment I had with a client that afternoon, I headed
toward the store’s exit. As I was about to leave the store’s premises, I heard someone shout
behind me ordering me to stop immediately while using some foul language. When I looked
back, I saw a six-foot, two hundred-fifty pound man grabbing my arm and shoving me back
to the store. Due to the tremendous force of that shoving, I lost balance and fell on my back,
right against one of the store’s checkout counters. I immediately felt extreme pain in my
back and was unable to move. I was then helped out by a store’s employee and was ordered
to go to the Loss Prevention room. I was told that police would be called to the premises if I
did not directly go the Loss Prevention room. There were approximately twenty-five
2
customers watching me as I was escorted to the Loss Prevention room. I felt extremely
embarrassed by the ordeal. Once we got to the Loss Prevention room, I asked the man, who
accosted me at the store’s entrance and who then followed me to the room, the reason for
my detention. He then mentioned that it is against the store’s policy for him to discuss the
matter further and that I would have to wait for the store’s manager. Almost an hour later,
the store manager, Ms. Parker, arrived. At that point she notified me that I have been
detained because one of the store’s employees had observed me stealing a fountain pen set.
I immediately denied any involvement in the matter and offered to empty my pockets. Ms.
Parker was then satisfied that I have done nothing wrong. She politely apologized and
allowed me to leave the store’s premises.
Later that afternoon, I was admitted to Ceder Sinai Hospital emergency room as I was
experiencing severe back pain arising out of my fall earlier that day. That same night, a
team of surgeons operated on my back as the condition severely deteriorated. However,
they were unable to successfully treat the back injuries in this and in two other surgeries
that followed. I am now diagnosed with an abnormal degeneration of my spine resulting in
irreparable back injury and permanent disability. This condition prevents me from ever
walking again or from ever sitting down for more than ten minutes at a time. As a result of
this permanent condition, I had to quit my job as a regional salesperson for Derk, a
pharmaceutical company. My doctor’s diagnosis indicates that these injuries to my back
would prevent me from ever working again.
Besides my past and future medical bills, I am also demanding that you compensate me for
loss of future income. As a fifty-five year old, highly successful career woman in the field of
pharmaceutical sales, I am now deprived of any prospects of employment for the rest of my
life. I am attaching a copy of my gross yearly income from my sales position during the last
fifteen years and data regarding the Price Index. (See Excel data file).
Please respond to my settlement offer on or before April 15. I hope this matter could be
resolved amicably.
Sincerely,
Susan Kim
Required:
Suppose your team is working for Barry Levin. Your team has just confirmed that, for all
practical purposes, Ms. Kim will be unable to work at all during the next twelve years,
including all of 2016. Write a report, addressed to Debbie West, Chief Administrator of
Artisan. Be sure to follow the guidelines for writing a report found on the instructor’s web
site.
To prepare for this case, your team may want to review business law LDC concepts 2 and 9,
financial accounting LDC concept 7, macroeconomics LDC concept 1, and statistics LDC
concepts 1, 4, and 8.
3
***Make sure include in text citations***
case text
case law library
ethics
porters five forces
counterargument
Case preparation document (“Case Prep Doc”):
Case#2 Artisan Emporium
Mar 28, 2022
2
Cover Letter (no page number)
To: Barry Levin
From: Team Four
Date: March 28, 2022
Subject: Artisan Emporium
Dear, Mr. Barry Levin
Within this report, you will find a detailed evaluation of business law, accounting,
macroeconomics, and a statistical analysis. That will help you understand the position in which
your clients stand in the case as well as their options, a strategic analysis, ethical
recommendations, and general recommendation. Our team carefully analyzed all material facts
and issues related to the case to address questions and concerns. All information was gathered by
skilled professionals with experience and deep understanding of business law, macroeconomics,
accounting and statistics.
On behalf of all of us at Team Four, we thank you for working with us and for giving us
the opportunity to help you. If you have any questions or concerns, please feel free to contact us.
3
Table of contents
4
Executive Summary
Material Facts
Open Issues and Questions
A Legal Analysis
Question 1
Question 2
Question 3
Ethical considerations
Recommendations
Work cited
5
Executive summary
6
7
Main Body
This case arises from a shoplifting incident at Artisan Emporium involving Susan Kim a
customer and Jimmy Lee security guard. During which Kim was injured due to the way the
situation was managed. In the letter received by Barry Levin from the customer and the security
guard both provided a detailed account of the incident, both similar but with different
perspectives. In Jimmy Lee’s letter he has reasonable cause to believe that Susan Kim has
shoplifted a set of fountain pens due to Kim’s actions such as making sudden movement to her
pocket and proceeding at an accelerated pace to the exit along with other substantial evidence to
have probable cause. Other material facts according to Lee that led him to believe that Kim
shoplifted a set of fountain pens was that he had previously seen all sets of the pens be in stock,
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but one disappeared once Kim had left the premises. According to Kim she was at Artisan
Emporium to gather art supplies for her daughter’s school project upon not being able to find the
fountain pen the teacher requested she quickly made her exit to be able to reach an appointment.
Both their letters detail the remainder of events after the hastily way to the exit. In which Kim
was ordered to stop using foul language and was eventually shoved into the checkout counter. In
both accounts of the incident both agree that Kim suffered an extreme back pain after the fall she
suffered and continued to suffer on the way to the Loss Prevention Room. Complaining of back
pain while limping to the Loss Prevention Room, Kim still had to wait for the store managers as
per store policy for Lee to discuss the matter further without manager supervision. It is important
to note that no fountain pen set was found on Kim after the manager reviewed her belongings.
Later, Kim notes that she continued to suffer from back pain late into the evening that caused her
admittance into Ceder Sinai Hospital emergency room in which she received surgery for her
back injury as the condition severely deteriorated. However, surgery and treatments were
unsuccessful causing irreparable damage and permanent disability. Indicating that Kim will
never be able to work again as she now suffers from abnormal degeneration of the spine meaning
she had to quit her job as it prevents her from walking or sitting for more than ten minutes at a
time. Kim also demands compensation of $570,000 in medical expenses and $950,000 loss of
future income. We will be analyzing whether Kim was falsely imprisoned by Artisan Emporium
during the one hour she had to wait for the store manager and whether the court will compensate
her for future loss of income according to all present material facts.
1. Would the merchant defense relieve artisan emporium from liability under the
cause of action of false imprisonment? Do a full legal analysis and discussion, and
use the materials in the case library appropriately.
9
Plaintiff, Ms. Kim, in her letter to Debbie West, Chief Administrator of Artisan
Emporium Inc., wrote in her first sentence that she was falsely imprisoned by one of the
employees, injured during the process, and demanded compensation. Looking into both Jimmy
Lee’s and Ms. In Kim’s letter, it was gathered that there was shouting involved, possibly foul
language, a grab and shove from the arm, an injury, and a significant wait time in which the
plaintiff endured in the lost prevention room (Efrat, Gunther, 2017). In Ms. Kim’s defense, there
were factors that pushed our team to believe that Artisan Emporium will not be relieved under
the cause of action of false imprisonment.
False imprisonment is evident in this situation because of the way Ms. Kim was handled
into the lost prevention room. To begin, foul language and shouting was something that should
not have happened. It was then followed by grabbing of the arm and forcefully pulled back into
the store; in both letters the word “shove” or “shoving” was used to describe the notion. Jimmy
had no right to grab her by the arm let alone shove her back into the store. The shoving resulted
in injury that was later discovered to be extremely severe. The plaintiff waited in the prevention
room against her will, for an excessive amount of time, and without word of why she was being
held (Efrat, Gunther, 2017). If this event was done in a reasonable manner it would not have
been considered false imprsonment.
Through our legal analysis we used a similar case called Ray Turner et. al. vs. Pinto C.
DeBlanket in which is written that a case will be considered an authorized detention if it follows
the following: (1) the person making the arrest was a peace officer, and employee, or a merchant;
(2) the person doing the action must have reasonable cause to suspect the person of theft; (3) if
the detention was done in reasonable manner; (4) it was done in the premise of the store; (5)
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should last a appropriate amount of time. Our legal team is looking into section 3 and 5 because
Jimmy does not meet the requirements for an authorized detention due to the fact that it was not
done in a reasonable manner and the detention lasted an unreasonable amount of time.
Key factors in Article 215 in Ray Turner et. al. vs. Pinto C. DeBlanket Jimmy’s actions
were not done in a reasonable manner. Factors that state (a) whether the merchant threatened,
coerced, or intimidated the customer; (b) whether there was foul language or forced use on the
customer;(c) whether the customer was told the reason for the detention and if it was done in
public infront of others. In the previous case Deblanket never threatened Turner with an arrest,
there was no foul language used by Deblanket, and Turner was told why she was being detained
on the premises of the shop. Unlike at Artisan Emporium where Kim suffered an injury due to
being shoved by an authorized peacemaker and immediately told to go to the lost prevention
room or else the police would be called (Efrat, Gunther, 2017). She was threatened by the fact
that police would be called on her and intimidated with that statement from Jimmy to go to the
room. Not knowing why she was being forced to the lost prevention room, the situation was
conducted in a way that made Ms.kim believe she would be in much greater trouble if she did
not cooperate; this checks off the first factor that implies that it was not done in a reasonable
manner.
Legal Analysis: Counterargument
When the customer walked through the door rushing to find the product she was looking
for, she was displaying very suspicious behavior. When the loss prevention officer
noticed the lady was displaying suspicious behavior, he had probable cause to question
the behavior of the customer. As the lady rushed out of the store, the loss prevention
11
officer didn’t have the opportunity to reasonably question the customer and had to resort
to force to be able to.
2. Assuming the artisan emporium is liable for false imprisonment and assuming that
MS. Kim is deemed unable to locate another job for life due to her present medical
condition, is a court likely to award her compensation for a loss of future income?
What standard will the court consider in determining whether Ms. Kim is entitled to
compensation? Do a full legal analysis and discussion using the case library.
Assuming Artisan Emporium is liable for false imprisonment and that Kim will not be
able to find another job due to her present medical condition; the court is likely to compensate
her for future loss of income. According to the material facts it is known that Kim suffered
extreme back pain after she was shoved by Jimmy Lee causing her admittance to Ceder Sinai
Hospital emergency room where they operated on her back as the condition severely deteriorated
(his website, 2020). It is also important to note that the treatments and surgery were
unsuccessful in treating Kim back injuries causing the development of abnormal degeneration of
the spine resulting in irreparable back injury, and permanent disability (his website, 2022).
Kim’s letter to Barry Levin informs that her condition does not allow her to sit or walk for more
than ten minutes at a time. As the accompanying symptoms of abnormal degeneration of the
spine will prevent her from working ever again, she had to quit her job as a pharmaceutical
salesperson(his website). Indicating that Kim will not be able to secure another job as a 55 year
employee for the remainder of her life because of her current medical condition has left her with
irreparable damage and permanent disability. Therefore, the court is likely to compensate Kim
12
for future loss of income due to her diagnosis indicating that she will never be able to work again
due to her present medical condition.
According to the material facts of the case Kim was diagnosed with abnormal
degeneration of the spine meaning that she is permanently disabled and unable to work again for
the remainder of her life. The standard the court will consider in determining whether Kim is
entitled to compensation include the following injuries at the time of the shoplifting incident
such as being injured by an authorized peacemaker, and if the injury caused diminished earning
capacity to earn future income. It is certain that Kim was injured during the altercation by an
authorized personnel, Jimmy Lee, an employee of Artisan Emporium. Lee’s wrongdoings such
as the shoving that led her to fall on the cashier counter significantly impacted Kim’s future
income prospects that caused the development of abnormal degeneration of the spine. Her
present medical condition according to the doctor’s diagnosis indicated that she would not be
able to work for the rest of her life. Therefore, it is very likely that the court will award Kim
compensatory damages for future loss of income because now she is incapable of securing
another job for the remainder of her life.
The law that the court will take into account when rewarding Kim compensation for
future
loss of income includes the following: an injured party has the right to be compensated for
diminishing earning capacity. This means that an injured plaintiff, Kim, has the right to be
compensated for diminishing earning capacity because she can not find another job after she was
forced to quit being a pharmaceutical sales person. Referring back to Peter Calder, PlaintiffRespondent, v. Todd Koehler Defendant- Appellant case the plaintiff Peter Calder had the right
to claim compensation for diminished earning capacity as he was fired from his job as a
13
construction worker for not being able to do the “strentonous work the job required” (his website
2022). Similar to Kim, Peter Calder also suffered from a back injury which resulted in a
diminished earning capacity such as missing work for three months. Another relevant law the
court will consider is, the measure of damages for tort recovery encompassing diminished
earning capacity can be based on the wages lost as a result of the defendants wrongdoings. In
Calder’s case the jury awarded him $50,000 for past wages lost from missing three months of
work and being unemployed sixteen months after being fired (his website case law library). In
Kim’s case it is important to note that her medical diagnosis indicates that she was, “deprived of
any prospects of employment for the rest of her life” (his website) unlike Calder in which his
condition was stopped by Dr. Sherman antibiotics treatment (his website case law library).
Indicating that Lee’s wrongdoings at the time of the altercation resulted in diminished earning
capacity for Kim. Another possible law the court will consider when awarding Kim
compensatory damages for future loss of income include, “that measure included the value of the
decrease in the plaintiffs future earning capacity, when the effects of injury will extend into the
future, the plaintiff is entitled for further compensation for the capacity to earn in the future has
been taken from the plaintiff, either in whole or in part” (his website, 2022). Considering that
Kim now suffers from abnormal degeneration of the spine that prevents her from either walking
or sitting for more than ten minutes at a time it is clear to see that Kim’s future earning potential
has decreased in whole. Her future income will cease to exist because now her present medical
condition prevents her from ever working again. Unlike Peter Calder in which he was able to
find another job as a senior citizen van driver, however, it does not discount the fact that he was
not left permanently disabled nor did he suffer irreparable back injuries. Peter Calder’s future
earnings were just taken from him in part due to the fact that he was able to find another job with
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a difference in salary from $25.65 to $5.50 an hour unlike Kim who would never be able to work
again. Therefore in Kim’s case her future earning capacity will extend into the future unlike
Calder in which he was able to find another job, Kim was deprived of employment prospects.
Therefore, considering all material evidence relevant to prior case laws Kim will most likely be
awarded compensatory damages for future loss of income.
Kim is able to support a claim for future loss of income due to the facts that she was
injured during the incident by an authorized peacemaker and the injury caused the development
of abnormal degeneration of the spine. The development of her present medical condition
essentially caused her to quit her job because the condition prevents her from either walking or
sitting for more than ten minutes at a time, therefore, leading to her quitting her job. Her doctor’s
diagnosis also indicated that she will not ever be able to work for the rest of her life as the
condition therefore depriving her of any employment opportunities. Therefore, the plaintiff, Kim
has the right to be compensated for diminished earning capacity since she will not be able to
obtain employment in the future. Consequently, she will be able to claim future loss of income
because her future earnings capacity significantly decrease when she was shoved by Lee leading
to an abundance of events which include but are not limited to several back surgeries, treatment,
not being able to walk or sit, forced to quit the job, and not being able to secure any employment
in the future. Therefore, Kim is entitled to compensation because her future earning capacity
decreases as a result of the defendants wrongdoings. Kim is also able to maintain a claim of loss
of future loss of income because her injuries extend to the future as she was left with irreparable
back injuries and permanent disability that has deprived her of future employment prospects. It is
clear that Kim will be compensated for future loss of income because her future earnings
capacity significantly decreased by the defendants wrongdoings, the future loss of income will
15
extend into the future, and she is entitled to be compensated for diminished earnings capacity
whether it was taken away in whole or in part.
However, it is possible that Kim will not be able to maintain a future loss of income
claim and not be rewarded because she is a fifty- five year old that did not provide any medical
records of her diagnosis. In the material facts Kim informs that she is looking for compensation
for medical care expenses and loss of $950,000 for loss of future income. This will present a
problem in a future loss of income compensation because the jury will take into consideration
that Kim did not present any medical records, therefore, we do not know if the diagnosis of
abnormal degeneration of the spine is certain. Unlike Calder, who had two different doctors, Lee
and Sherman, tell him that he had “tuberculosis of the spine” (his website). It is also important
to note Kim’s age at the time of the altercation because it could be a possible factor of her
present medical condition especially since she did not attach any medical records past or present
in her letter. Referring to the previous case, Calder was thirty-five years old at the time of the
accident and denied ever experiencing back pain prior to the accident. However it is important to
note that despite the absence of any medical records past or present and regardless of age both
Kim’s and Calder’s incident led to events in which their future earnings capacity was
significantly impacted by the defendants wrongdoings. Both Calder’s and Kim’s incidents cause
future loss of income and are entitled to be compensated because of their diminished earnings
capacity due to their medical conditions developed by the incidents. Also, the future earning
capacity of both of them were decreased due to the wrongdoings of the defendants in Kim’s case
being shoved by an authorized peacemaker of Artisan Emporium. Their injuries also extend into
the future, diminishing future earning capacity and depriving them of any future employment
opportunities whether in part or in whole their future income capacity has been taken away.
16
Therefore, they are entitled to future loss of income compensation regardless of medical records
and age under previously mentioned laws such as an injured party has the right to be
compensated for diminishing earning capacity, the measure of damages for tort recovery
encompassing diminished earning capacity can be based on the wages lost as a result of the
defendants wrongdoings, “that measure included the value of the decrease in the plaintiffs future
earning capacity, when the effects of injury will extend into the future, the plaintiff is entitled for
further compensation for the capacity to earn in the future has been taken from the plaintiff,
either in whole or in part” (his website).
1. Was the customer displaying suspicious behavior?
*If the customer displayed suspicious behavior during her visit to the store, the store
employee has reasonable cause to detain the customer.
2. Were the security cameras able to see what had happened at the scene?
*If the security footage proves the customers innocence, then there is no need to make
customers wait for a manager to arrive at the scene.
3. Did the loss prevention officer have probable cause to question the customer?
*Since the customer walked in the store, she displayed suspicious behavior, which would
grant probable cause for the store’s employee to question the customer.
4. Why wasn’t the security footage reviewed earlier?
*Reviewing the security footage earlier would have proven the innocence or guilt of the
customer.
5. How was the compensation package structured?
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*The compensation claim needs to be structured correctly using nominal or real value of
projected billable hours.
6. …
Table 1, Ms. Kim’s Gross income from 2001 to 2015 converted to Real Income
Year
Gross Income
Adjusted CPI
Real Income
2001
$86,058.00
1.7710
$48,592.89
2002
$82,757.00
1.7990
$46,001.67
2003
$85,571.00
1.8400
$46,505.98
2004
$85,853.00
1.8890
$45,448.91
2005
$83,370.00
1.9530
$42,688.17
2006
$83,786.00
2.0160
$41,560.52
2007
$89,752.00
2.0734
$43,286.94
2008
$94,155.00
2.1530
$43,731.39
2009
$97,586.00
2.1454
$45,486.79
2010
$89,988.00
2.1806
$41,268.30
2011
$96,020.00
2.2494
$42,687.13
2012
$103,405.00
2.2959
$45,038.20
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Year
Gross Income
Adjusted CPI
Real Income
2013
$104,261.00
2.3296
$44,755.47
2014
$91,471.00
2.3674
$38,638.40
2015
$106,477.00
2.3702
$44,923.78
Note: Source for CPI: https://www.minneapolisfed.org/about-us/monetarypolicy/inflation-calculator/consumer-price-index-1913-
In Table 1, The Gross income is the nominal income while the Real Income is the
adjusted income for changes in purchasing powers due to inflation. The Adjusted CPI is the
measurement of change in prices that a consumer pays. “The Base Year in Case is 1982-1984.
Price Index for Base Year is Always 100.” (Smith 2022). By dividing gross income over the
adjusted CPI, it can calculate the real income. In Figure 1, it shows that Ms. Kim’s gross income
in 2015 went down to $44.923.78 because of 2.37 CPI. In the Case, Ms. Kim demanded
$950,000.00 for future loss income for the next twelve years. However, Ms. Kim computed her
demand using nominal income. The proper measurement for compensatory damages “is the
present value of net future income after taxes.” (Smith 2022).
Table 2, Descriptive Statistics
Statistics
Gross Income
Real Income
STDEV
$
7,987.34
$
2,454.63
Median
$
89,988.00
$
44,755.47
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Mean
$
92,034.00
Sample Variance
$ 63,797,600.29
$
44,040.97
$ 6,025,219.04
Table 2 shows the Descriptive Statistics of both Gross Income and Real Income. To
compare the values, Gross Income has a median value of $89,988.00 while Real Income has a
median value of $44,755.47. The median value is the middle amount of income if her income
was arranged in ascending or descending order. Ms. Kim’s average gross income for 15 years is
$92,034.00 while her average real income is $44,040.97. The mean is the computation of her
average income for the last 15 years. The measures of dispersion for gross income have a
variance of $63,797,600.29 and a standard deviation of $7,987.34 while the measures of
dispersion for real income have a variance of $6,025,219.04 and a standard deviation of
$2,454.63. This is used to measure the variability of the data and describes the spread of the data.
Figure 1, Adjusted CPI and Projected CPI
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The Graph of Adjusted CPI and Project CPI from Figure 1 shows a linear regression. The
regression output computed in Excel has computed the following values:
Table 3, Regression Results from Excel file
Regression Results
Value
R2
0.986094981
p-Value for Year
1.86E-13
Regression Coefficient for Year
0.046322143
Regression Equation
-90.91934219+0.0463221439(year)
Price Index=
Intercept + Coefficient(year)
The value of R2 supports the graph that adjusted CPI has a linear relationship with the year.
Since the regression is linear, the regression has an equation of 0.91934219+0.0463221439(year). This means every year the adjusted CPI increases by 0. 0463.
The p-Value is 0.000 and it means that the adjusted CPI and Year have a correlation whereas
every new year it changes the adjusted CPI to a higher value resulting in a positive slope.
Ms. Kim stated that her future loss income request covers twelve years of work. The
formula for the regression equation must be used to compute the projected adjusted price index
for the future year of 2016 to 2027. The results for adjusted CPI for the year 2016 to 2027 are
shown in the table below.
Table 4, Regression Equation for projected adjusted CPI and projected gross income
21
YEARS Projected Adjusted
CPI 2016-2027
Projected Gross Income
(using mean real income)
2016
2.466098098
$108,609.35
2017
2.512420241
$110,649.42
2018
2.558742384
$112,689.50
2019
2.605064527
$114,729.57
2020
2.65138667
$116,769.64
2021
2.697708813
$118,809.71
2022
2.744030956
$120,849.79
2023
2.790353099
$122,889.86
2024
2.836675242
$124,929.93
2025
2.882997385
$126,970.00
2026
2.929319528
$129,010.07
2027
2.975641671
$ 131,050.15
The results of the projected adjusted CPI are used to compute the projected gross income. To
find the projected gross income for the year 2016 to 2027, the average real income or mean real
income from Table 2 is multiplied by the projected adjusted CPI. The results are shown in Table
4.
After projecting the adjusted CPI, the projected gross income will be reduced by income
tax of 29.5% to find the net income. The results of Gross Income -Tax = Net Income are
provided in Table 5.
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Table 5, Net Income computation
Projected Gross Income
Gross Income
Net Income
(using mean real income)
Tax 29.5%
(after tax)
$108,609.35
$ 32,039.8
$76,569.59
$110,649.42
$32,641.6
$78,007.84
$112,689.50
$33,243.4
$79,446.10
$114,729.57
$33,845.2
$80,884.35
$116,769.64
$34,447.0
$82,322.60
$118,809.71
$35,048.9
$83,760.85
$120,849.79
$35,650.7
$85,199.10
$122,889.86
$36,252.5
$86,637.35
$124,929.93
$36,854.3
$88,075.60
$126,970.00
$37,456.2
$89,513.85
$129,010.07
$38,058.0
$90,952.10
$131,050.15
$38,659.8
$92,390.35
The result of net income is used to help in determining the present value. Since the value of
money changes over time, present value is a way to find the time value of money. Below in
Table 6 are the present values for the next twelve years with a discount rate of 5.75%.
Table 6, Net Present Value
Year
Present Value
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1
$72,416.97
2
$73,777.01
3
$75,137.06
4
$76,497.11
5
$77,857.16
6
$79,217.21
7
$80,577.25
8
$81,937.30
9
$83,297.35
10
$84,657.40
11
$86,017.45
12
$87,377.49
Total Amount of Present Value
$958,648.72
There are factors that could cause Ms. Kim’s future income to differ from our estimate.
The future income will depend on the inflation rate, discount rate, and other economic downturns
or growth. In our estimate, if the projected adjusted CPI changes the gross income will change
and it will change the net income and present value as well. In addition, the consumer’s
consumption depends on the economic status and consumption is the basis of inflation.
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Ethical Considerations
Direct stakeholders: Susan Kim, Jimmie Lee, Jennifer Parker, kimberly Youseff,
employees, and customers
Indirect stakeholders: Barry Levin, Debbie West,
ethics
–
Write about stakeholders, organizations, industry or society
–
Identify direct and indirect stakeholders
–
Use at least four ethical theories
–
***Minimum 2 pages max 3***
Strategic Considerations
porters five forces
–
. This section focuses on issues that may 1), substantively change the capital or
labor structure of the organization, 2), alter the values, vision, mission, objectives,
or goals of the organization, 3), significantly change a key product or process, 4),
be inherently long-term or have far reaching impacts, or 5), impact other parts of
the organization, industry, or society.
–
***Minimum 2 pages max 3***
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Recommendations
–
each written case report must have a “recommendations” section. The
“recommendations” section should link to one or more conclusions from each
section in the “main body” (technical analysis) of the report. The
“recommendations” section is where a team gets to repeat key
–
findings (and limitations, if necessary), support or challenge conclusions, and
perhaps most importantly, offer suggestions and reasoned opinions. Don’t be
“wishy-washy” (i.e., equivocal or “on-the-fence”); make deliberate and actionable
recommendations that your team feels that it can defend comfortably and
publicly. Organizations want your teams’ perspective; it’s just that your opinions
can’t have any value until after you have done prior, sufficient technical analysis
including ethical and strategic considerations. The “recommendations” section is
to be no less than one full page and no more than two full pages
–
***Minimum 1 page max 2 ***
Work Cited ( APA format)
Smith, W. (2000). Artisan Emporium Student Coaching Notes[PowerPoint
slides].https://ocw.smithw.org/2022spring/bus302-4714/outline.html
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