In: Finance
Your first job out of college will pay you $68,000 in year 1 (exactly one year from today), growing at a rate of 2.6% per year thereafter. You will also receive a one time bonus of $48,000 at the same time as your first salary. You plan to retire in 36 years (you'll receive 36 years of salary). If the applicable discount rate is 7%, what is the present value of these future earnings today? Round to the nearest cent.
Answer: $ 1,249,478.54
Note:
Year | Cash Flow | Discounting Factor( 7%) | Present Value ( Cash Flow * Discounting Factor) |
1 | 116000 | 0.934579439 | 108411.215 |
2 | 69768.000000000 | 0.873438728 | 60938.07319 |
3 | 71581.968000000 | 0.816297877 | 58432.2085 |
4 | 73443.099168000 | 0.762895212 | 56029.38871 |
5 | 75352.619746368 | 0.712986179 | 53725.37647 |
6 | 77311.787859774 | 0.666342224 | 51516.10865 |
7 | 79321.894344128 | 0.622749742 | 49397.68923 |
8 | 81384.263597075 | 0.582009105 | 47366.38238 |
9 | 83500.254450599 | 0.543933743 | 45418.60591 |
10 | 85671.261066315 | 0.508349292 | 43550.92492 |
11 | 87898.713854039 | 0.475092796 | 41760.04576 |
12 | 90184.080414244 | 0.444011959 | 40042.81024 |
13 | 92528.866505014 | 0.414964448 | 38396.19 |
14 | 94934.617034144 | 0.387817241 | 36817.28126 |
15 | 97402.917077032 | 0.36244602 | 35303.2996 |
16 | 99935.392921035 | 0.338734598 | 33851.57513 |
17 | 102533.713136982 | 0.31657439 | 32459.54774 |
18 | 105199.589678543 | 0.295863916 | 31124.7626 |
19 | 107934.779010186 | 0.276508333 | 29844.86582 |
20 | 110741.083264450 | 0.258419003 | 28617.60031 |
21 | 113620.351429326 | 0.241513087 | 27440.80179 |
22 | 116574.480566489 | 0.225713165 | 26312.39499 |
23 | 119605.417061217 | 0.210946883 | 25230.38996 |
24 | 122715.157904809 | 0.19714662 | 24192.8786 |
25 | 125905.752010334 | 0.184249178 | 23198.03125 |
26 | 129179.301562603 | 0.172195493 | 22244.09352 |
27 | 132537.963403230 | 0.160930367 | 21329.38313 |
28 | 135983.950451714 | 0.150402212 | 20452.287 |
29 | 139519.533163459 | 0.140562815 | 19611.25838 |
30 | 143147.041025709 | 0.131367117 | 18804.81411 |
31 | 146868.864092377 | 0.122773007 | 18031.53203 |
32 | 150687.454558779 | 0.114741128 | 17290.04847 |
33 | 154605.328377307 | 0.107234699 | 16579.05583 |
34 | 158625.066915117 | 0.100219345 | 15897.30026 |
35 | 162749.318654910 | 0.093662939 | 15243.5795 |
36 | 166980.800939938 | 0.087535457 | 14616.74072 |
Present Value | 12,49,478.54 |