Question
Your salary is 120,000 per year. Your paycheck is cut monthly. You will receive this amount for the next 30 years. Assume that A
PR is 12%, what is the present value of your life time income
Solutions
Answer1
Answer:
$972,183.30
Explanation:
your monthly salary is $120,000 / 12 = $10,000
you will work for 30 years or 360 months
APR = 12%, so monthly discount rate = 12% / 12 = 1%
Present value = $10,000 x annuity factor
PV annuity factor, 1%, 360 periods = 97.21833
present value = $10,000 x 97.21833 = $972,183.30
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