Mr Sam gets annual pension payments for the next 30 years. After the first payment, each subsequent annual benefit will be adjusted upwards to reflect impact of inflation. You are given: (i) The first benefit is 44,000 and will be paid one year from today. (ii) The inflation rate is 1.6% per year forever. At an annual effective interest rate of 8.5%, what is the current value of the pension?

Mr Sam gets annual pension payments for the next 30 years. After the first payment, each subsequent annual benefit will be adjusted upwards to reflect impact of inflation. You are given: (i) The first benefit is 44,000 and will be paid one year from today. (ii) The inflation rate is 1.6% per year forever. At an annual effective interest rate of 8.5%, what is the current value of the pension?

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 12E

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