Assume you work for an employer who will contribute $60 a week for the next 20 years into a retirement plan for your benefit. At a discount rate of 9 percent, what is this employee benefit worth to you today?

Present Value= $28,935.66

Explanation:

Giving the following information:

Assume you work for an employer who will contribute $60 a week for the next 20 years into a retirement plan for your benefit. The discount rate is 9 percent.

First, we need to calculate the final value using the following formula:

FV= {A*[(1+i)^n-1]}/i

A= weekly deposit= 60

n= 20*52= 1,040

i=0.09/52=0.00173

FV= {60*[(1.00173^1040)-1]}/0.00173= $174,638.85

Now, we can calculate the present value:

PV= FV/(1+i)^n

PV= 174,638.85/ (1.00173)^1040= $28,935.66

a

explanation:

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