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 APR is 12%, what is the present value of your life time income

Answer 1

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