You are to receive an end-of-year bonus of $50,000 increasing by $1000 for each of the...

You are to receive an end-of-year bonus of $50,000 increasing by $1000 for each of the next ten years. If MARR is 12% and inflation rate is anticipated to be 2%, what will be purchasing power?

Expert Solution

	(a)	(b)	(c ) = (a)-(b)	(d)	*(e ) = (c )(d)**
Year	Bonus	Inflation Adjusted Bonus	Increase in Purchasing Power	DF @ 12%	Present Value of the increase/decrease in Purchasing power
1	50000	50,000.00	-	0.892857	-
2	51000	51,000.00	-	0.797194	-
3	52000	52,020.00	-20.00	0.71178	-14.24
4	53000	53,060.40	-60.40	0.635518	-38.39
5	54000	54,121.61	-121.61	0.567427	-69.00
6	55000	55,204.04	-204.04	0.506631	-103.37
7	56000	56,308.12	-308.12	0.452349	-139.38
8	57000	57,434.28	-434.28	0.403883	-175.40
9	58000	58,582.97	-582.97	0.36061	-210.22
10	59000	59,754.63	-754.63	0.321973	-242.97

Decrease in purchasing power:	-992.97

jeff jeffy answered 1 year ago

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