Many academic institutions offer a sabbatical policy. Every seventh year a professor is given a year free of teaching and other administrative responsibilities at full pay. For a professor earning $50,000 per year who works for a total of 42 years, what is the present value of the amount she will earn while on sabbatical if the interest rate is 7% (EAR)? Note: Assume that the sabbatical annual salary is paid in one lump sum every 7 years. The equivalent discount rate is____% (round to three decimal places.).

Many academic institutions offer a sabbatical policy. Every seventh year a professor is given a year free of teaching and other administrative responsibilities at full pay. For a professor earning $50,000 per year who works for a total of 42 years, what is the present value of the amount she will earn while on sabbatical if the interest rate is 7% (EAR)? Note: Assume that the sabbatical annual salary is paid in one lump sum every 7 years. The equivalent discount rate is____% (round to three decimal places.).

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 23P

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