Question

In: Finance

Your first job out of college will pay you $47,000 in year 1 (exactly one year...

Your first job out of college will pay you $47,000 in year 1 (exactly one year from today), growing at a rate of 3.9% per year thereafter. You will also receive a one time bonus of $22,000 at the same time as your first salary. You plan to retire in 44 years (you'll receive 44 years of salary). If the applicable discount rate is 5%, what is the present value of these future earnings today? Round to the nearest cent.

Solutions

Expert Solution

PV of CFs = CF * PVF(r%,n)

Year CF PVF @5% Disc CF
1 $    69,000.00     0.9524 $       65,714.29
2 $    48,833.00     0.9070 $       44,292.97
3 $    50,737.49     0.8638 $       43,828.95
4 $    52,716.25     0.8227 $       43,369.79
5 $    54,772.18     0.7835 $       42,915.44
6 $    56,908.30     0.7462 $       42,465.85
7 $    59,127.72     0.7107 $       42,020.97
8 $    61,433.70     0.6768 $       41,580.75
9 $    63,829.62     0.6446 $       41,145.14
10 $    66,318.97     0.6139 $       40,714.10
11 $    68,905.41     0.5847 $       40,287.57
12 $    71,592.72     0.5568 $       39,865.51
13 $    74,384.84     0.5303 $       39,447.87
14 $    77,285.85     0.5051 $       39,034.61
15 $    80,300.00     0.4810 $       38,625.67
16 $    83,431.70     0.4581 $       38,221.02
17 $    86,685.53     0.4363 $       37,820.61
18 $    90,066.27     0.4155 $       37,424.39
19 $    93,578.85     0.3957 $       37,032.33
20 $    97,228.43     0.3769 $       36,644.37
21 $ 1,01,020.34     0.3589 $       36,260.48
22 $ 1,04,960.13     0.3418 $       35,880.61
23 $ 1,09,053.57     0.3256 $       35,504.71
24 $ 1,13,306.66     0.3101 $       35,132.76
25 $ 1,17,725.62     0.2953 $       34,764.70
26 $ 1,22,316.92     0.2812 $       34,400.50
27 $ 1,27,087.28     0.2678 $       34,040.12
28 $ 1,32,043.69     0.2551 $       33,683.50
29 $ 1,37,193.39     0.2429 $       33,330.63
30 $ 1,42,543.93     0.2314 $       32,981.45
31 $ 1,48,103.15     0.2204 $       32,635.93
32 $ 1,53,879.17     0.2099 $       32,294.03
33 $ 1,59,880.46     0.1999 $       31,955.71
34 $ 1,66,115.79     0.1904 $       31,620.94
35 $ 1,72,594.31     0.1813 $       31,289.67
36 $ 1,79,325.49     0.1727 $       30,961.88
37 $ 1,86,319.18     0.1644 $       30,637.51
38 $ 1,93,585.63     0.1566 $       30,316.55
39 $ 2,01,135.47     0.1491 $       29,998.95
40 $ 2,08,979.75     0.1420 $       29,684.67
41 $ 2,17,129.96     0.1353 $       29,373.69
42 $ 2,25,598.03     0.1288 $       29,065.97
43 $ 2,34,396.36     0.1227 $       28,761.46
44 $ 2,43,537.81     0.1169 $       28,460.15
PV of CFs $ 16,05,488.76

PV of CFs is $ 1,605,488.76


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